EMI this week announced a series of cuts stemming from what they claim is the entertainment industry's endemic failure to enforce copyright. This followed hot on the heels of the latest wave of lawsuits against 532 people by the recording industry for illegally sharing digital music files over the Internet. The wave of copyright lawsuits brought by the Recording Industry Association of America on behalf of recording companies also marked the first time the trade group has targeted computer users swapping music files over university networks.

 "We are sending a clear message that downloading or 'sharing' music from a peer-to-peer network without authorization is illegal, it can have consequences and it undermines the creative future of music itself," RIAA President Cary Sherman said in a statement.

Including the March 23/04 filings, the recording industry has sued 1,977 people since launching its legal assault against online music piracy last fall. The recording group has said that once it discovers a defendant's identity, it would contact them and offer them the chance to settle out of court before proceeding with the case.

To date, roughly 400 defendants have reached out-of-court settlements, an RIAA spokesman said. Still, the number of people sued by the industry so far represents a small slice of the estimated tens of millions of U.S. music fans who swap music, movies and other media files illegally online.

At any given moment, there are 5 million people swapping files online, said Eric Garland, chief executive of Beverly Hills-based BigChampagne, which tracks activity on file-sharing networks.

The recording industry blames lagging music sales in recent years on the rise of online music piracy. File-sharing has become a popular pastime on college campuses, and pressure is intensifying on schools to be vigilant to copyright infringement occurring over their computer networks.

"File-sharing is still an emerging technology that continues to get more popular over time," Garland said. "The number of files shared is up, and the variety is up."

The British record industry are also thinking about following the Americans in targeting individuals in expensive lawsuits. More than 7 million people in Britain now download music from illegal web sites and the British Phonographic Institute said warnings would be posted online threatening lawsuits against individuals downloading illegal music online.

The law suits are just the tip of the iceberg. The music industry, and to a lesser extent the film industry, are tied up in one of the most defining developments in the entertainment business. 

This fact was brought home on March 31st when EMI, the world's 3rd largest music company announced that it will cut 20% of its recording artists, slash 1,500 jobs and cease the production of its own CDs and DVDs in Europe and the United States in a bid to cut costs. 

Niche and under-performing artists would go, EMI said, but refused to give names. The music giant, home to the Rolling Stones, Coldplay and Norah Jones, blamed rampant digital piracy and competition from other entertainment for flat music sales. Many industry siders see digital piracy as the prime reason for faltering profit margins and an increasing pressure on cost-competitiveness.

"The time is right to further reposition EMI Music. Exiting manufacturing in our two primary regions of Europe and the US will allow us to lower our costs while flexibly meeting our supply needs," said EMI Music's Chairman Alain Levy.

"We believe that by concentrating our efforts on a tightened roster of artists we will increase our revenue-generating potential while reducing our costs."

The company said it would take a cash charge of 75 million pounds and a non-cash charge of around 80 million, tied to writedowns and its downsized artists roster, in 2003/2004.  In recent years EMI has seen two merger attempts blocked by regulators, one with Warner Music and one with Bertelsmann's music arm BMG. Last year it bowed out of the race for Time Warner Inc.'s music business. The culling of its artist roster could cause EMI to drop in the ranks of the world's largest music companies.