Online sharing of music and video files had been one of the huge problems for music industry since the end of the 20th century, as such companies as Napster that distributed music files for free, gained popularity. Despite the fact that Napster's activities were curbed, online files sharing was still widespread at the beginning of 2001. 2
New files-sharing systems, such as MusicCity and Kazaa were used by online users instead of Napster. Many specialists and analysts insisted that online sharing could be effectively combated by selling music files through online legal subscriptions of major recording companies, yet such services of recording companies had many drawbacks as it was still impossible to copy digital files to CDs as well as portable devices. Neither it was clear whether file sharing, would be as cheap as the services provided by Nepster and other file sharing system3
Many fans of Michael Jackson had already made acquaintance with this new technology as his single" You Rock My World" was so encrypted that it could not be copied. Sony was so much concerned with the piracy that it not only did not send in advance the album for the review, but allowed to hear it only at the party at one Sushi restaurant, where it took additional security measures to prevent illegal recording of the album.
Advantages of the new technology for the music industry were obvious, however some technological experts claimed that this technology might shorten the duration of life of discs. BBC engineers also stated that new discs could be played on the broadcast computers of the company. Moreover, activists of the Campaign for Digital Rights tried to stage some protests in an attempt to stop distribution of the encrypted discs.
New online technologies coupled with new technological development of personal computers (especially new CD burners) represented a huge threat to the businesses of many recording companies and even were blamed for the downfall of the sales in the music industry. As global level of sales of CDs reduced by 5 percent in the first six months of 2001, it was clear that at least major part of this downfall was due to the implementation of new technology that allowed CD to be copied on the computers. According to some analysts it cost recording industry millions of pounds in revenues, so one could understand the actions taken by recording companies.4
Despite the fact that global downfall in the level of sales of Compact discs was evident in global music industry (it was viewed as the worst downfall in two decades) music industry of Britain showed remarkable results in 2001 with increased level of sales (by more than 10 percent, comparing with global downfall of 11 percent).
Some analysts stated that the growth of sales in the United Kingdom was largely due to "strong release schedule" as many new British groups got international acclaim and eminence; three singles were sold by million copies. Moreover, there were fewer instances of piracy in the UK, than in other countries, strong consumer confidence and successful marketing campaign of major record shops. Some specialists predicted that music industry would exhibit slow growth in the first three years of the new century. 5
Though British record industry exhibited some growth, one of the largest record companies in the world- British EMI