Four years ago, we saw the change in music buying habits and the music industry still hasn't moved

Terry Semel, Yahoo!

Mr Semel's comments come in the wake of recent claims from the US music industry that illegal music downloads and CD copying, or burning, had led to a 10% drop in sales of compact discs last year.

The figures, published by the Recording Industry Association of America at the end of February, showed shipments of CDs to retail outlets dropped from 1.08bn in 2000 to 968.58m in 2001.

Too little, too late

But, at a panel discussion between online and media representatives, Mr Semel said the music industry was lagging behind in appreciating the changing expectations of consumers.

"Four years ago, we saw the change in music buying habits and the music industry still hasn't moved," he said.

Online music is a relatively new phenomenon

Pressplay and MusicNet are currently the major industry-backed online music ventures. But Mr Semel said this was not enough.

"They have limited amounts of music and they're not offering what people want," he said.

His criticism then turned on film companies.

He said they were also dragging their feet as online swapping of films was increasing by the day.

Impact

In defence, News Corp's president Peter Chernin said the solution to the illegal downloading and copying of media was more government regulation.

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Mr Chernin added this would need backing up with new anti-piracy technologies, coupled with continued prosecution of those guilty of copyright infringement and greater public awareness of the implications of piracy.

But, he concluded: "There are opportunities to be had that we'd be willing to explore."

The impact on media companies of online piracy was first highlighted by the phenomenal success of online music services such as Napster.

At the height of its use, Napster had more than 25 million users.

It was shut down by record companies in a legal battle over copyright payments but has spawned a host of similar services.

Burners

The companies are still seeking damages from Napster for allowing copyrighted songs to be trafficked by users who were able to swap and download recorded material for free.

Napster has been given more time to gather evidence before the ruling on the lawsuit.

CD burning is also becoming an increasing concern for record companies, with recordable CDs costing less and less.

Despite the situation in the US, the UK's CD market bucked the downward global trend and enjoyed a bumper year, with sales increasing by more than 5% in 2001.