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Free MP3 Music Not CD-RW Market Threat

The injunction brought against stopping end users from downloading free music from top artists off its site is not likely to negatively impact CD-RW drive sales, but MP3 portable player vendors could see some fallout, industry watchers said.

Consumers are starting to understand the versatility of the RW drives, so they are migrating away from simply downloading and recording free MP3 files with their CD-RW drives, manufacturers said. Recording music still plays a central part in CD-RW usage, but people are now creating their own CD-Rs from store-bought CDs.

“We haven’t seen any effects of this at retail, but it still might be too early to tell,” said Scott Elrich, marketing manager for TEAC America. “The MP3 [player] market could be impacted, but with CD-RW there are many other applications like storage and burning audio CDs, so I would be surprised if there was any impact.”

The Recording Industry Association of America filed a suit on behalf of almost all the major record labels against in the U.S. District Court for the Southern District of New York in January stating that the website was infringing upon the copyright laws of recording artists.

In April the RIAA was granted a partial summary judgment and took down the part of its site that allowed consumers to download popular songs.

Sima Vasa, divisional VP for technology products at NPD, Port Washington, N.Y., expects portable audio players to be affected. However, while NPD’s CD-RW forecast might have to be scaled back due to the court order, it would only be in the short term. Over the long haul she agreed with Elrich that the drives are not overly dependent upon free music downloads to drive sales.

Creative, maker of the Nomad, and Diamond, which sells the Rio, did not return calls for this article.

Portable audio player vendor Sony said it has not experienced any falloff in sales since the ruling was issued. The company is in the awkward position of being both a recording company and the producer of a device that can dodge copyright protection to download and play music for free.

Mark Viken, president of Sony’s Personal Network Solutions, said the company does not highlight that aspect of the players’ ability, but instead promotes copyright compliance by using its Magic Gate SDMI Memory Stick Media.

“I feel that SDMI-compliant software will in the end benefit everyone because more artists will be available [for download],” Viken said.