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So what’s responsible for this massive reduction in piracy? According to the survey, it’s not stepped-up enforcement – it’s the availability of free music via streaming services like Spotify. Nearly half of the people who had stopped or sharply reduced their music downloading cited those services as the reason for stopping.

So what’s responsible for this massive reduction in piracy? According to the survey, it’s not stepped-up enforcement – it’s the availability of free music via streaming services like Spotify. Nearly half of the people who had stopped or sharply reduced their music downloading cited those services as the reason for stopping.

What is lost from many calculations is the fact that the urge to own may be weaker in the age of streaming, but so is the urge to steal

Traffic to peer-to-peer file-sharing and torrent sites is declining where legal alternatives are offered

. Netflix’s Ted Sarandos said in May: “When we launch in a territory, the BitTorrent traffic drops as the Netflix traffic grows.”

In an analysis of the Dutch market, Will Page, an economist working for Spotify, found that releases by Rihanna and Taylor Swift that were held off Spotify sold just one legal copy for each BitTorrent download, while hits from One Direction and Robbie Williams that were instantly available for streaming sold four copies. “The legitimate market is beginning to outshine the illegitimate market,” says Cary Sherman, the RIAA’s chairman.

High rates of piracy for hits such as Game of Thrones in markets such as Australia show that consumers still look to illegal sources if content is not available legally in all parts of the world the minute that US consumers get it.

No one is ready to declare victory against the pirates, but the tide is starting to turn against them. The Napster generation is growing up – and behind it is an iTunes, Netflix or Spotify generation that has higher expectations of online content, but is more willing to pay.

Digital downloads were a logical continuation of the business model that generated fat profits for record labels in the heyday of physical music stores. In some cases, with no manufacturing or distribution costs involved, a hit digital album could actually be more lucrative than a physical CD.

However, the music industry’s core problem—that lots of fans just don’t want to pay for music—remains an issue. Most people use the free, ad-supported version of Spotify, and the company recently expanded its free offering to mobile devices. The most popular platform for listening to music among young people is YouTube, which is almost entirely free.

U.S. digital track sales decreased for the first time ever in 2013, dropping from 1.34

We can observe a strong difference between the influence of attitude on intention to use free MaaS and the intention to use paid MaaS: building a strong attitude therefore does not lead directly to high willingness to pay; instead, it is the intention to test free MaaS that is influenced by attitudes.

We found that the search for music recommendations and the flat rate preference influence the attitude towards MaaS positively and significantly. The new recommendation functions and the pricing model are therefore functions users rated highly and which can help build a strongly positive attitude towards MaaS.

Pirates seem satisfied with the sound quality of tracks provided via illegal networks and seem to feel safe from prosecution.

Our study demonstrated the attractiveness of MaaS offers to music pirates. Nevertheless, most music pirates prefer free MaaS.

We showed that flat rates are regarded as an attractive pricing model by music pirates and that this constitutes a suitable alternative to pay-per-download, which is often considered too expensive (Al-Rafee and Cronan 2006).

Users who do not consider music piracy owing to moral scruples and higher search costs also show a positive attitude towards MaaS.

A reason for the increased willingness to pay may also relate to hedonistic social benefits, established by integrating social features into recommendation systems

MaaS providers should therefore focus on comprehensive, user-friendly recommendation systems that support social exchanges between MaaS users. Our study results clearly demonstrate that a platform’s features positively influence the attitude towards MaaS. Besides direct recommendations from friends, users can receive recommendations based on tagged music channels or collaborative filtering.

The presented study demonstrates that new offers of music consumption can also be an attractive alternative for music pirates. Although there is no indication of the reduction of illegal downloads in general, music pirates consider the free ad-based version of MaaS an alternative. Music pirates who have rejected legal music consumption due to high prices in the past may well switch to legal consumption.

Pandora

if they really like it they will share it and their friends will discover it and they in turn will listen to it

Daniel Ek is the founder and CEO of the music streaming service Spotify

But again, what I sort of emphasize that we're paying the labels. We don't pay the artists directly.

What we're really trying to do here is move people away from piracy into a legal model that contributes revenue back to the music industry.

Yeah, I do want to address that because I feel that it's important to mention that it's still early days and Spotify's only two years in using the service, almost three. But in that short period of time now we've become the second largest revenue generator for the labels in Europe and we've paid out more than a 150 million dollars back to the music industry.

He recently wrote on his blog that 5,000 plays on Spotify generates a little more than six dollars, and in comparison 5,000 track downloads at iTunes generates for him $3,400. I mean, it's a big gap there.

I definitely think that we want to have access and that's the big shift here, but I do think that ownership still plays an important role. You do want to own the things you really care about.

At the same time one of the big criticisms that we've heard from artists is that the royalties that they get from Spotify are so low that it might as well be piracy.

I think if you keep creating great music people will in fact listen to it and they will in fact buy it if they think it's a great record.

Right from the beginning Spotify founder Daniel Ek held a solid belief that if his service offered a better experience and superior convenience than that being offered by The Pirate Bay, people would jump on board.

And they have. Earlier this year the service confirmed it had amassed a total of 24 million users worldwide, 18 million on their ad-supported service and 6 million paying a subscription.

The notion, that “it’s impossible to compete with free”, sat well with lawmakers and governments, who looked at offerings coming out of The Pirate Bay and thousands of other similar sites and widely agreed that no-one will pay for something if they can get it for nothing.

“A key part of this [success] has been in ensuring that Spotify has a free [ad supported] tier. By offering this free tier, Spotify is able to compete with piracy on cost and bring music consumers into the legal framework,” the company notes.

In Sweden, a market that should be the most difficult to turn around if file-sharing traditions are any barometer, Spotify says that the number of people who pirated music fell by 25 percent between 2009 and 2011.

In Denmark the IFPI reports that 48% of users using streaming services had previously been illegal downloaders. An impressive 8 out of 10 of those have now stopped completely.

Norway, a success story documented earlier this year, has seen its piracy rates drop to just one-fifth of their levels four years earlier, with streaming services taking most of the credit.

There can be little doubt that torrent sites such as The Pirate Bay will always have a following, but when services such as Spotify offer their basic services for free, one has to question why people wouldn’t at least try them

The report shows that in 2008 almost 1.2 billion songs were copied without permission. However, by 2012 that figure had plummeted to 210 million, just 17.5% of its level four years earlier.

As expected, piracy of movies and TV shows in 2008 was at much lower levels than music, with 125 million movies and 135 million TV shows copied without permission. But by last year the figures for both had reduced by around half, to 65 million and 55 million respectively.