Share and share alike

If the record industry thought they had stopped online trading of free music by forcing Napster offline, they were wrong. Eight months after a US court declared it illegal, the practice is still going on.

A new generation of free music exchanges has emerged, with networks such as Morpheus, Winmx, Audiogalaxy and Kazaa filling the void left by Napster. These operations, claims the industry, have caused the biggest slump in music revenue for almost two decades. An announcement made this week by The International Federation Of The Phonographic Industry revealed that global sales fell by £1.23billion in 2001, and they pointed the finger of blame at file sharing operations.

The new exchanges, which have popped up all over the world, are proving difficult to shut down. The world's courts have not been universally sympathetic to record industry concerns and a flurry of legal actions has produced hit-and-miss results.

Japanese record companies were successful in gaining an injunction against Japan MMO, and its service File Rogue, which now cannot allow its users to download copyrighted songs. But in other nations a different view has been taken. In Holland, for instance, judges recently decided that people using the music exchange service Kazaa were the ones violating copyright laws, not the service itself, and they refused to shut it down.

The legal position with the new services is unclear. With Napster, users had to go through a central hub to find the music they wanted, but software for the new systems means everything can be downloaded from the user's PCs. The software makers claim they can't control how their product is used, but, more importantly, are unable to shut anything down because there is no centralised system.

This uncertainty makes it likely that record companies will be in the courts for some time. But the longer these legal wrangles go on, the worse it gets for them. According to Internet research company Jupiter MMXI, not only are record companies exaggerating the impact file sharing is having on profits, but they are also alienating consumers in their attempts to curb it.

Mark Mulligan, a music analyst at Jupiter MMXI, believes the fact people are no longer replacing vinyl and tape collections with CDs, which artificially buoyed revenue during the 1990s, is the main cause for the decline. He says: 'File sharing is definitely going to have an impact but the industry shouldn't lose its sense of scale - only 3 per cent of the population even use it.

'The reputation of the record industry is at an all time low. Accusations of over-priced CDs, through to the tackling of Napster, have alienated a generation of music listeners, for whom the concept of music as a paid-for commodity does not exist.'