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Proximity Research Report

**Advertising on Legal vs. Illegal Music Sites **

Why Advertising on Illegal Music Sites is Beneficial By - Ali Martino

Spring 2010

**Table of Contents **

Executive Summary 1 Introduction 2 Illegal Downloading is here to Stay 2 Dominant Force in Illegal Music Sites 3 ITunes vs. Lime Wire 5 Targeting Gen-Y 6 Recommendation 7 Attachment 1: Lime Wire’s Simple Set up 8 Attachment 2: Transferring Lime Wire Songs to ITunes 9 Attachment 3: Easy to Read Ads 10 References 11

**Executive Summary **

Peer to peer file sharing, introduced in 1999, forever changed the way individuals downloaded music files. The increased popularity of illegally downloading lead to numerous lawsuits.But with new sites emerging and a soaring amount of people downloading illegally, the thought of being sued seems to be a thing of the past. Founded in 2000 by CEO Mark Gorton, Lime Wire is a leader of innovative peer-to-peer software development and solutions in the file sharking industry. It is extremely easy to use, can integrate iTunes, and even works through firewalls. Competition between peer to peer downloading sites such as Lime Wire and pay per song sites such as iTunes will continue to occur. Yet the ability to target sites such as Lime Wire, where an enormous amount of Gen-Y clients go, will financially benefit advertising companies. To be able to develop ways to directly connect to a large Gen-Y population can show positive results for both the clients and marketers.

Make all of this the intro topic.
 * Introduction: ****Illegal Downloading is here to stay **

Illegal Downloading has shown a gradual increase since January 08 Figure 1. Growth in Download Requests Source: []

Music companies need to stop resisting and accept that illegal downloading is a fact of 21st-century. Pay per song music services continue to lower song prices, but even when the prices are approaching near zero people are more likely to act habitually than to break their habit. 95% of music downloads in 2008 were illegal.

A New national survey conducted for the Business Software Alliance found that two thirds of 1,062 college and university students said they have no ethical reservations about illegally downloading digital copyrighted files from the internet for free. The survey released also stated that 52 percent of the college-age respondents believe it is permissible to pursue such downloading of software, music, and movies at school or at the workplace.

Do you have a reference for the BSA survey? Add reference here to Proximity focus group results.

Since this whole section is about iTunes, get the name in the topic heading.


 * Dominant Force in Legal Music Downloading Sites **

ITunes is a digital media player application used for playing and organizing digital music and video files. ITunes store can be used to purchase and download music, music videos, television shows, applications, ipod games, audiobooks, movies, and etc. ITunes has contributed $790 million of the $16 billion in revenue Apple made at the end of 2009.

Since iTunes works together with iPods, the world’s best selling portable media players; it’s easy to see why iTunes is the world’s largest pay per song music retailer. For this reason, they are not finding much competition in pay per song music sites. ITunes focuses on developing new products that are easy to use and coincide with iTunes. This allows them to charge as much as $1.29 per song and still dominate over other music programs. (Apple insider)

<span style="font-family: 'Cambria','serif'; font-size: 12pt; line-height: 115%;">Figure 2. Digital Music Sales Market Share <span style="font-family: 'Cambria','serif'; font-size: 10pt; line-height: 115%;">Source: [] <span style="font-family: 'Cambria','serif'; font-size: 12pt; line-height: 115%;"> Apple Inc. revealed significant pricing and copyright changes to its iTunes store. The changes include a new three-tiered pricing plan for songs, and also plans to drop copy protection from all of the songs in its digital store. The changes appear to be in response to shifts in the digital-music market. By dropping the copy protection on more than 8 million songs, customers using competing products such as Zune and Sandisk will be able to download and listen to songs from iTunes on their devices.


 * <span style="font-family: 'Cambria','serif'; font-size: 16pt; line-height: 115%;">ITunes vs. Lime Wire **

<span style="font-family: 'Cambria','serif'; font-size: 12pt; line-height: 115%;">More than one billion songs have been purchased from its iTunes music services. That sounds like a great number until you consider that an estimated ten million users of Internet based peer to peer networks are logged on at any one time to swap music.

<span style="font-family: 'Cambria','serif'; font-size: 12pt; line-height: 115%;">In a world with variance in individuals’ needs and valuations, these dimensions are evaluated, allowing both models to coexist. Legal considerations play an important role as a number of p2p users have been sued by record companies, both other aspects, such as the availability of content are also relevant. Other differences such as Digital rights management (DRM) technologies are used to limit the playback of music purchased on iTunes, which p2p services has no such restrictions. In contrast, indexing data contained in media files is better on iTunes. This allows collections to constantly be organized allowing for a better navigation experience.
 * __<span style="font-family: 'Cambria','serif'; font-size: 12pt; line-height: 115%;">Paying for Apple vs. Downloading for Free __**

Encoding quality also has a big part in choosing iTunes vs. Lime Wire. Quality of music varies widely in p2p networks, whereas the exceptional quality on every song purchased on iTunes. Yet, services on p2p networks have continued to improve over the years and in many cases surpass that of iTunes. ITunes provides a unified interface when obtaining the content of a song. It integrates the location, purchase, and consumption, of content. Users of p2p networks must endure various levels of congestion that puts a damper on the quality of the process.

<span style="font-family: 'Times New Roman','serif'; font-size: 12pt;">Table 1. Lime Wire vs. iTunes <span style="font-family: 'Times New Roman','serif'; font-size: 10pt;">Source: <span style="font-family: 'Times New Roman','serif'; font-size: 10pt;">[]
 * <span style="font-family: 'Cambria','serif'; font-size: 12pt; line-height: 115%;">Lime Wire **
 * **<span style="font-family: 'Cambria','serif'; font-size: 12pt;">Strengths ** || **<span style="font-family: 'Cambria','serif'; font-size: 12pt;">Weaknesses ** ||
 * <span style="font-family: 'Cambria','serif';">Its free || <span style="font-family: 'Cambria','serif';">Under constant attack by industry players ||
 * <span style="font-family: 'Cambria','serif';">Variety of content || <span style="font-family: 'Cambria','serif';">Downloading time varies ||
 * <span style="font-family: 'Cambria','serif';">No restrictions on content (no DRM) || <span style="font-family: 'Cambria','serif';">Congestion problems ||
 * <span style="font-family: 'Cambria','serif';">Constantly improving due to technological race || <span style="font-family: 'Cambria','serif';">Congestion problems ||
 * <span style="font-family: 'Cambria','serif';">Decentralized – makes it hard || <span style="font-family: 'Cambria','serif';">No anonymity ||
 * iTunes **
 * ** Strengths ** || ** Weaknesses ** ||
 * Legal || Customers must pay for content ||
 * Easy to use || Restrictions on content (DRM) ||
 * High reliability || Less variety of content ||
 * Information about files ||  ||
 * Works well with iPod ||  ||

I would rename this section - it is not about targeting Gen-Y //per se// but rather about Gen-Y using P2P. In fact, what I would suggest is making the section above about P2P and moving the survey data up there. Put the generic Gen-Y stuff in the intro. Then make the subsection here on Limewire as an open social network a separate topic. In other words, you want to move from the general issue of illegal downloading, through an explanation of P2P, to s specific focus on Limewire Gen-Y Uses P2P **
 * <span style="font-family: 'Cambria','serif'; font-size: 16pt;">

__<span style="font-family: 'Cambria','serif'; font-size: 12pt;">Why should Advertising companies focus on reaching out to Gen-Y? __

<span style="font-family: 'Cambria','serif'; font-size: 12pt;">Gen-Y currently makes up for 28% of the population. They have received the best in education and inquire the most personal wealth in history. They are the largest group to influence the American scene since the baby boomers. Gen-Y consumers have grown up in an even more technologically advanced media than their parents and respond to advertising differently. About three-quarters of Gen-Y use the internet regularly. The group’s tendency to use this medium as its main communication method should encourage marketers to create ways and means to target its members.

__<span style="font-family: 'Times New Roman','serif'; font-size: 12pt;">Why Advertise to Gen-Y through Lime Wire? __

· 40% of Lime Wire users are between the ages of 13-21 · 49% of Lime Wire users are between the ages of 21-35 · 44% of Lime Wire users are students · 16% of Lime Wire users are employed in the I.T. field · 98% of Lime Wire users have high-speed Internet connections · P2P users are highly tech savvy · Over 200 million P2P users worldwide · P2P users download over 1.5 billion files every month Figure 3. Demographics of P2P users Source: <span style="font-family: 'Times New Roman','serif'; font-size: 10pt;">[]

__ Developing an Open Social Network __

Lime Wire’s system will keep tract of the type of music customers are downloading. Through their database they are able to use that relationship between the user and they type of music that is being downloaded to be stored in Lime Wire’s records. In turn, Lime Wire will allow advertisement sites to tap into people’s connections and preferences. This will make it so all web sites can work together to build a more comprehensive map of connections.

This is important because people show how information moves through their connections. People are increasingly discovering information not just through links to web pages but also from the music that they download. All websites can work together to build a more comprehensive map of connections and create a better, more social experience for everyone.

Lime Wire is able to put people at the center of the web. It lets you shape your experiences online and make them more social. For example, if you download a particular band, that information can become part of the graph which will then be connected to certain advertisements that appeal to that type of customer.

The first sentence here doesn't make sense. I think what you are trying to say is that Proximity clients need to understand the new competitive landscape in online music.
 * <span style="font-family: 'Times New Roman','serif'; font-size: 14pt; line-height: 115%;">Recommendation **

<span style="font-family: 'Times New Roman','serif'; font-size: 12pt; line-height: 115%;">Since Proximity is a Gen-Y on demand strategy group, it is important to understand the underlying connection by using a new landscape. Through inside networks, Proximity clients will be able to develop customized campaigns that can reach Gen-Y from the peer to peer network Lime Wire.

· <span style="font-family: 'Times New Roman','serif'; font-size: 12pt; line-height: 115%;">Target specific customers based on interests · <span style="font-family: 'Times New Roman','serif'; font-size: 12pt; line-height: 115%;">Be involved in a map of inside connections · <span style="font-family: 'Times New Roman','serif'; font-size: 12pt; line-height: 115%;">Reach Gen-Y through sites that are most visited

<span style="color: #ff0000; font-family: 'Times New Roman','serif'; font-size: 12pt; line-height: 115%;">"report recommends" <span style="font-family: 'Times New Roman','serif'; font-size: 12pt; line-height: 115%;"> This report is recommending that Proximity clients take an inside look at Gen-Y’s interests and to act on that information to be able to directly connect with them. Being able to directly connect with Gen-Y through Lime Wire will give Proximity clients an inside financial advantage to the future.


 * <span style="font-family: 'Times New Roman','serif'; font-size: 14pt;">Attachment 1: Lime Wire’s Simple Set Up **

<span style="font-family: 'Times New Roman','serif'; font-size: 12pt;">Lime Wire’s simple homepage makes downloading music simple and easy to understand



<span style="font-family: 'Times New Roman','serif'; font-size: 12pt;"> Being able to transfer songs from Lime Wire to iTunes allows songs to be put on ipods.
 * <span style="font-family: 'Times New Roman','serif'; font-size: 14pt; line-height: 115%;">Attachment 2: Transferring Lime Wire Songs to iTunes **

<span style="font-family: 'Times New Roman','serif'; font-size: 12pt;"> Ads on Lime Wire that target Gen-Y
 * <span style="font-family: 'Times New Roman','serif'; font-size: 14pt;">Attachment 3: Easy to Read Ads **

<span style="font-family: 'Times New Roman','serif'; font-size: 14pt;">**References**

<span style="font-family: 'Times New Roman','serif'; font-size: 12pt; line-height: 115%;">Anonymous. (2007.) //Advertising to Generation-Y,// allbusiness.com. Retrieved May 3, 2010 from []

BBC iPlayer. (2008.) Growth in Requests to View. TheStage.co.uk. Retrieved May 1, 2010 from []

Crum, Chris. (2009.) //LimeWire CEO talks Money Music Industry and Company//, google.com. Retrieved May 7, 2010 from []

<span style="font-family: 'Times New Roman','serif'; font-size: 12pt;">HomeBusiness (2009.) //Marketing to Generation Ys,// Homebusinesslink.com. Retrieved May 5, 2010 from []

<span style="font-family: 'Times New Roman','serif'; font-size: 12pt; line-height: 115%;">LimeWire LLC. (2010.) //Lime Wire, The Company.// LimeWire.com. Retrieved May 1, 2010 from []

NPD Group. (2009.) //ITunes Dominates Online Music Sales//, Edibleapple.com. Retrieved May 2, 2010 from [|http://www.edibleapple.com/itunes-dominates-online-us-music-sales-chart][|/]

Raymound. (2010.) //LimeWire 5 Pro//, google.com. Retrieved May 7, 2010 from [] Silverthrone, Sean. (2007.) //Delivering the Digital Goods: ITunes vs. Peer to Peer//, hbs.edu. Retrieved May 2, 2010 from [|http://hbswk.hbs.edu/item/5594.html table 1]

Wiki. (2010.) //iTunes Integration//, google.com. Retrieved May 7, 2010 from [|http://wiki.limewire.org/images/e/ec/ITunesOptions.png attachment 2]

Wong, Brad. (2005.) //Illegal Downloading Don’t Pose Ethical Problems for College Students//, Seattlepi.com. Retrieved May2, 2010 from []

ZapShares. (2010.) //ZapShares Media Network//, Zapshares.com. Retrieved May 3, 2010 from []

Zuckerburg, Mark. (2010.) Building the Social Web Together, Facebook.com. Retrieved May 6, 2010 from []