• by Masha Geller , July 16, 2003

Looks like the warning from the recording industry about file sharing applications is actually having a frightening effect on consumers.

Nielsen//NetRatings reports a decline in traffic for several popular file-sharing applications following the June 24 announcement by the Recording Industry Association of America that people who illegally downloaded music could be sued or prosecuted.

"With the negative publicity and threat of steep fines, some surfers appear to be backing off," said Greg Bloom, senior Internet analyst, Nielsen//NetRatings. "However, with millions of loyal users, these applications aren't likely to go offline in the near future."

Traffic to KaZaA declined by one million unique visitors during the week ending July 6 at home, a 15 percent drop one week after the announcement. Across the board, traffic fell at other popular applications. Morpheus.com drew 231,000 unique visitors during the week ending July 6, decreasing 15 percent from the previous week. Surfers logging onto iMesh declined 16 percent, recording 214,000 unique visitors, while BearShare did not make Nielsen//NetRatings' reporting cutoff after the legal warning was announced.

Weekly Trend of Select File-Sharing Applications (U.S., Home)

                   Unique Audience (000) 
Application       6/29/2003 7/6/2003% Growth

KaZaA             6,526     5,577     -15% 
Morpheus            272       231     -15% 
iMesh               255       214     -16% 
BearShare           192       N/A      N/A

Source: Nielsen//NetRatings, July 2003