The Truth About File-Sharing

A series of new studies of Napster users suggests everything you've been reading about music file-sharing systems is baloney. You're not thieves and pirates, it turns out, but marketing pioneers and music lovers quite willing to pay for music. These new stats suggest that file-sharing could have enormous implications for the selling of content, culture and information online, none grasped by dunder-headed corporations like the record labels. They are also a reminder not always to believe what you read. (Read more).

According to the January issue of American Demographics, a magazine which hardly supports radical copyright-infringers, music sites like Napster have created "powerful new opportunities for music marketeers." Despite the best efforts of the greedy record companies and a few recording stars -- Metallica and Dr. Dre come readily to mind -- to alienate a new generation of music lovers, recent figures prove that file-sharing services actually generate sales and put more money in artists' pockets.

This has enormous implications for those making movies, publishing books, or creating any kind of saleable entertainment. It suggests that the Net may work best as a three-step process: first connecting customers with culture, then generating interest in cultural and informational offerings, then keeping track of their tastes through sophisticated new digital marketing research. Theoretically, file-sharing approaches could go beyond shopping to stimulate interest in education, business, even politics, if the music experience is any indicator. And it sure ought to be.

The relationship between new decentralized software programs -- Napster, Freenet, Gnutella, P2P -- and such issues as copyright infringement, artists rights and conventional retailing is complicated. Legal, political, educational and other institutions haven't begun to sort through them. But clearly the music industry's panicky and greedy overreaction will prove one of the most dunder-headed, short-sighted responses in recent business history. The industry couldn't have been more off-base, dishonest or greedy.

Nearly 75 percent of college students have downloaded music from the Net, 58 percent of them using Napster, according to a recent study by Greenfield Online, a Connecticut research firm, and YouthStream Media Networks. Nearly two-thirds of the 1,135 college students surveyed say they download music as a way to sample music before buying it. The proliferation of online music is introducing consumes to artists they don't know, in almost precisely the same way department stores offer samples of food, perfume and other retail items. A survey by Yankelovich Partners for the Digital Media Association found that about half the music fans in the U.S. turn to look for artists they can't or don't hear in other venues, like radio. Nearly two-thirds of those who downloaded music from the Web say that their search ended in a music purchase. Music labels should have been donating money to Napster users, not threatening to sue them and chase the site off of college campuses.

And the much-libeled Napster users are dedicated music buyers, quick to reach for their wallets. Jupiter Research says it found that 45 per cent of online music fans are more likely to have increased their music purchases than online fans who don't use Napster. The Jupiter study of Napster users found that 71 percent of users say they're willing to pay to download an entire album.

Interestingly, reports American Demographics, the Jupiter Study of Napster users found that 71 percent of those who use the site said they were willing to pay to download an entire album. But in a Greenfield Online survey of 5,200 online music shoppers, nearly 70 per cent say that they have not paid -- and will not pay -- for digital music downloads. This suggests that subscription-based services may be more likely and successful than a per-song fee system.

This potentially revolutionary model for marketing culture is about to be dismantled by the new partnership between Napster and Bertelsmann, which is giving the file-sharing site more than $50 million to develop software that will charge users for music. Bertelsmann says it will keep a part of Napster "free," but watch for yourself to see how quickly it shrinks.

These figures, remarkably, demonstrate that almost every assumption about the free music movement, reported in most media outlets and used as justification for a wave of new legislation and legal action like the Digital Millenium Copyright Act, is dead wrong:

• Most music downloaders aren't thieves or pirates but music lovers willing to pay for music.
• Artists have made more money from this new generation of music lovers than they would have without them.
• The true significance of file-sharing wasn't an end to intellectual property, but an exciting new way to develop markets.
• Record companies and other corporations should be supporting file-sharing sites ratherthan hiring lobbyists and lawyers to intimidate, sue and enrage new and eager customers. College students have nearly universal access to broadband, and are tomorrow's mainstream consumers. The more information and culture they have access to, the likelier it is that they'll sample new venues, products and information.
• Evidently, file-sharing isn't a dangerous menace but an effective new method of disseminating -- and selling -- content, and culture. Aside from these new findings, the Napster experience also suggests that when it comes to dealing with the Net, businesses often have no idea what's good for them.

And oh, yeah. Don't believe what you read about yourself.

Comments

Well, duh

[Phaid]

Big Media has always been quick to shoot itself in the foot. They also said that the VCR would be the end of the film industry. Today's statistics don't quite agree with that viewpoint.

Just because a medium can be used to copy their product, doesn't mean it won't also increase their sales to the point that the lost revenue due to copying is offset a hundred times by the gains in sales.

What's it matter if two people run around with bootlegged copies of oh say a Lard album, when twenty people downloaded "The Power of Lard!", liked it, then ran over to Alternative Tentacles' website or Amazon.com and ordered their CD?

Thieves! Thieves and Liars! Hypocrites and Bastards!

Re:Well, duh

[bobbv]

Big Media has always been quick to shoot itself in the foot. They also said that the VCR would be the end of the film industry. Today's statistics don't quite agree with that viewpoint.

When I was in college in the late 80s, I was in a nonprofit student film cooperative. VCRs may not have affected the big Hollywood film industry, but it definitely affected the independent film distribution world. Whereas in 1986 we could show a different film every night and make money, by 1990 we were down to one film per week. That was completely because VCRs had gotten cheap enough that college students could afford them. And we weren't the only ones. The independent "art" film theaters in town suffered, too. One of the three closed (it's reopened since, but only because Urban Outfitters rents the space where the two large street-level screens used to be) and another switched formats several times before closing a couple of years ago. My film coop closed in 1996 after struggling and loosing money for most of the 90s.

I'm not saying that VCRs are evil or that the film industry was right in fearing them--I agree that technological change should not be resisted, but adjusted to--just that the transition to VCRs was not completely smooth or "victimless."

(And, tangentially, it wasn't just the coops and movie theaters that suffered. Many of the movies we showed were not--and are not--available on tape. We often rented prints directly from the filmmakers, so when we went under, so did a source of independent film income.)

Re:Well, duh

[cowscows]

It seems to be more of an issue of perhaps the music industry sees the potential of online music sales to provide profit, but they just aren't sure how to best exploit it, and since it's hard to get an organization such as the music industry to change direction quickly, they might just be trying to control it as much as possible while they try and make the change, in hopes of avoiding smaller unknown companies from jumping in and grabbing up all the business. I don't really think of this as a valid excuse for all the headaches the record companies are causing, but it's maybe a slightly optimistic take on it all.

Karma Whore to the Rescue!

[Danse]

Calling all Karma Whores: will someone please post the links for "Courtney Does the Math" and the Steve Albini rant that's based on?

Here ya go:

Steve Albini's rant

Courtney Love Does the Math

Why?!

[tomcrooze]

This survey was of college students! If you survey them, how many of these students would really say "oh, of course, I bought the music after I downloaded it"? Slim to none. None if they have a CD-writer. There simply is no way that this survey was accurate. Go to American Demographics to find out yourself.

And oh, yeah. Don't believe what you read about yourself.

*feeling pretty stupid*
Isn't this reserved for April Fool's?

give it up

[kootch]

we're all pirates and doing fairly illegal stuff

not to say that the RIAA is doing stuff fairly, but they are doing it legally.

i'll admit. i've bought 1 new cd in the part 5 months, while i've burned 200 high quality cds from mp3's with a bitrate for 192 or higher that I downloaded from Napster. I download the mp3s, burn the full cd's, then delete the mp3s to make room for more. I use amazon's recommendation system to pick out which cd I want next based on whether I like the one I just downloaded or not.

I bought that 1 cd because I couldn't find it on napster and I had $10 off at BN.com while I was buying books.

Don't tell me what we're doing is legal. It isn't, and shouldn't be. But I do it anyway because I love music but detest paying $18/cd

The true fear

[SuperguyA1]

I believe that the recording industry isn't woried about losing record sales, they're woried about losing their monopoly on distribution. A monopoly is much more valuable than the actual CD's.

Re:College Student

[VAXman]

Since that has happened I have not bought one new CD(thats about 1 year now). I dont want to buy a whole CD for one song, I want to Download other Songs by an artist and hear the Songs in FULL before I waste $12-$16 on a CD that cost MAYBE $5 to make.

Your first step is to listen to something else besides Top 40 pop music (the only kind of music which has one good song per album).

Re:give it up (Yes and No)

[SomeOtherGuy]

Ok. This guy has a point. And I did try this out the other day:
A - Find a CD I want.
B - Hunt Napster for songs from that CD.
C - Attempt to download said songs (preferablly from people with connections faster than my 300bps BBS days).
D - After finally putting together the whole album..(A task I can only compare to finishing my Original Star Wars IV "in the box" figure set...Unless you are looking for top 40...which you could just hit hear on the radio anyway) Determine if the songs are actually "whole" songs and not snippets of downloads gone bad in a previous life.
E - Convert to WAV files
F - Burn to CDR

Time spent hunting: 1+ hours
Time spent dload (T1): 1+ hours
Time spent re-dload (people think it's neat to cancel a request 3 megs in: 1+ hours
Time spent quality check: 45 mins (listen to each song)
Time spent convert and burn: 45 mins


Total time: 5.5+ hours for 1 CD (I think my time is a little more valuable than that....I will stick to buying them the old fashioned way thank you...Unless it is OOP or something)

Musician's Associations

[johnrpenner]

--| piracy or copyright? the third solution |---

- copyright exists to ensure musicians get paid.
- the other side is that once an artist produces something,
it goes beyond them and many benefit.
- between consumers and producers now stands record companies
- but paying artists is only a step on the way to gaining profit.
in practice, many musicians (who play instruments) starve, while
marketing bimbos (spice girls) thrive - this is wrong.

- a fundemental qualitative difference between physical and
electronic goods is - if i have an apple and give you an apple,
i no longer have an apple; but if i have an idea and give you an idea,
we BOTH have an idea. therefore you cannot treat electronic things as
if they were actually physical goods, because they aren't!

- still, you must compensate producers of the original bits.
so what to do?

> MUSICIANS ASSOCIATIONS:

- the physical distributors and merchandisers pay into the musician's
pool that pays and feeds the musicians.
- the musicians pool distributes it equitably among its active producers.
- from the pool comesmore new music. which is given away for free.
unlimited digital copies for everyone, never again a dime paid for
anything that's just DATA.
- distributors get fresh music, and sell and package more STUFF.
- distributors pay back a percentage of sales back into the pool.
- so it comes back and feeds itelf (the most important part).

> RESULTS:

- so all software is free - you get mindshare from it.
- but if you make a physical whose value lies on the free music on it,
then a percentage goes back.
- but the artist is not paid direct - it goes to the musician's pool,
which doles out shares each month by percentage of overall downloads
from a service such as Napster.

http://home.earthlink.net/~johnrpenner/Articles/ St einer-Social.html

--

The Strength of the Wolf is the Pack;
and the Strength of the Pack is the Wolf.
(Rudyard Kipling)

One fine day

[Chops]

... Jon Katz comes home to find his neighbor cutting down a tree in his yard and muttering incoherently about "free landscaping." Katz approaches the neighbor and asks what he is doing.

"Here!" says his neighbor, and thrusts a thick sheaf of statistics at him. "The American Demographic Society says that 81% of passing drivers believe your lawn to look better without this tree!"

"Wha?" says Jon Katz.

"And here! I've got a completely different landscaping model which, according to my calculations, can increase the beauty of your lawn by fifty percent or more! Think of all the new friends you'll have!"

Jon Katz chases the guy away with a stick. His neighbor, while running, shouts, "Short-sighted dunderhead!" and "Closed-minded corporate goon!"