Piper Sandler News Releases


News Releases  |  In the News

Minneapolis, Minn.-September 18, 2003 - According to a recent survey conducted by U.S. Bancorp Piper Jaffray Senior Software Security and Design Analyst Gene Munster, 67 percent of the 200 consumers surveyed indicated that if they had a user-friendly option for online music they would buy online instead of going to a record store. The survey focused on consumer awareness and themes related to online music. Specifically, Munster asked individuals about brands in online music, illegal file sharing, Internet usage and the Recording Industry Association of America (RIAA) lawsuits.

Of the people questioned in the survey, 38 percent indicated that they have illegally shared music online through file swapping networks (Kazaa, Morpheus, etc.) within in the past three months. In addition, 70.5 percent were aware the RIAA is suing individual file swappers.

"We expect to continue to see the number of file swappers to decline as the awareness related to the record industry's crackdown spreads," said Munster. "We believe that it is likely that many of the individuals using illegal file sharing networks will decide to look for a legitimate online music download service. While the concept of mainstream online music purchasing is still primarily a vision, we believe that this is a shift that many consumers are poised to make."

According to the RIAA, the U.S. music industry posted revenue of $12.6 billion last year. Munster believes that a significant portion of these sales will move online over the next several years. In his opinion, there are a number of underlying trends moving the market in this direction, including: crackdown on file-sharing networks, proliferation of high-speed Internet access and continued growth of consumer CD and DVD burning. Munster expects the online music market to grow to approximately $240 million in 2006 from 16.9 million in 2003.

With 92.5 percent brand recognition among those surveyed, Munster believes that Napster, which will be relaunched by Roxio, Inc. (Strong Buy, #, $10.46) later this year, stands the best chance to benefit from this shift in consumer buying habits. Similar competitors such as Apple's iTunes and Rhapsody had brand awareness of 29.5 percent and 15 percent, respectively.

Survey Methodology
The survey was conducted at the Mall of America in Bloomington, Minn. Respondents were in various age groups: 10-18 years old (7 percent), 19-23 years old (35.5 percent), 24-35 years old (37 percent), 36-50 years old (16 percent) and above 50 years old (4.5 percent). 60 percent of those surveyed were male and 40 percent were female.

To receive a copy of Munster's recent research report on Roxio, clients and members of the media should contact Dana Wade at or 415-277-1556.

About U.S. Bancorp Piper Jaffray
U.S. Bancorp Piper Jaffray, a subsidiary of the consolidated group of U.S. Bancorp, is a focused securities firm comprised of two revenue-generating segments -- Capital Markets and Private Client Services. Clients of both segments are supported by Investment Research, an independent group reporting to the CEO. The firm provides a full range of investment products and services to individuals, institutions and businesses. The firm has over 124 offices in 25 states across the country. U.S. Bancorp offers a comprehensive range of financial solutions through U.S. Bank, U.S. Bancorp Asset Management, U.S. Bancorp Investments and U.S. Bancorp Piper Jaffray. For more information on U.S. Bancorp Piper Jaffray, visit

Rating Definitions
Investment Opinion: Investment opinions are based on each stock's return potential relative to the overall market*, not on an absolute return.
Strong Buy: Expected to outperform the relevant broader market index over the next 6 to 12 months. An identifiable catalyst is present to drive appreciation.
Outperform: Expected to outperform the relevant broader market index over the next 12 to 18 months.
Market Perform: Expected to perform in line with the relevant broader market index over the next 6 to 12 months.
Underperform: Expected to underperform the relevant broader market index over the next 6 to 12 months.
* Broader market indices = Russell 2000 and S&P 500

Volatility Rating: Our focus on growth companies implies that the stocks we recommend are typically more volatile than the overall stock market. We are not recommending the "suitability" of a particular stock for an individual investor. Rather, it identifies the volatility of a particular stock.
Low: The stock price has moved up or down by more than 10% in a month in fewer than 8 of the past 24 months.
Medium: The stock price has moved up or down by more than 20% in a month in fewer than 8 of the past 24 months.
High: The stock price has moved up or down by more than 20% in a month in at least 8 of the past 24 months. All IPO stocks automatically get this volatility rating for the first 12 months of trading.

The following disclosures apply to stocks mentioned in this report if and as indicated: (#) U.S. Bancorp Piper Jaffray (USBPJ) was making a market in the Company's securities at the time this research report was published. USBPJ may buy and sell the Company's securities on a principal basis. (^) A USBPJ analyst who follows this Company or a member of the analyst's household has a financial interest (a long equity position) in the Company's securities. (@) Within the past 12 months, USBPJ was a managing underwriter of an offering of, or dealer manager of a tender offer for, the Company's securities or the securities of an affiliate. (>) USBPJ has either received compensation for investment banking services from the Company within the past 12 months or expects to receive or intends to seek compensation within the next three months for investment banking services. (~) A USBPJ analyst who follows this Company, a member of the analyst's household, a USBPJ officer, director, or other USBPJ employee is a director and/or officer of the Company. (+) USBPJ and its affiliates, in aggregate, beneficially own 1% or more of a class of common equity securities of the subject Company. (=) One or more affiliates of U.S. Bancorp, the ultimate parent company of USBPJ, provided commercial banking services (including, without limitation, loans) to the Company at the time this research report was published.

Nondeposit investment products are not insured by the FDIC, are not deposits or other obligations of or guaranteed by U.S. Bank National Association or its affiliates, and involve investment risks, including possible loss of the principal amount invested.

USBPJ research analysts receive compensation that is, in part, based on revenues of USBPJ Equities and Investment Banking, which include overall investment banking revenues. USBPJ research analysts who follow this Company report to the Head of Investment Research who, in turn, reports directly to the Chief Executive Officer of U.S. Bancorp Piper Jaffray.

This material is based on data obtained from sources we deem to be reliable; it is not guaranteed as to accuracy and does not purport to be complete. This information is not intended to be used as the primary basis of investment decisions. Because of individual client requirements, it should not be construed as advice designed to meet the particular investment needs of any investor. It is not a representation by us or an offer or the solicitation of an offer to sell or buy any security. Further, a security described in this release may not be eligible for solicitation in the states in which the client resides. Officers or employees of affiliates of U.S. Bancorp Piper Jaffray, or members of their families, may have a beneficial interest in the Company's securities and may purchase or sell such positions in the open market or otherwise.

Notice to customers in the United Kingdom: This report is a communication made in the United Kingdom by U.S. Bancorp Piper Jaffray to market counterparties or intermediate customers and is exclusively directed at such persons; it is not directed at private customers and any investment or services to which the communication may relate will not be available to private customers. In the United Kingdom, no persons other than a market counterparty or an intermediate customer should read or rely on any of the information in this communication.

Securities products and services offered through U.S. Bancorp Piper Jaffray, member SIPC and NYSE, Inc., a subsidiary of U.S. Bancorp.

Additional information is available upon request.

© 2003 U.S. Bancorp Piper Jaffray, 800 Nicollet Mall, Suite 800, Minneapolis, Minnesota 55402-7020