File Sharing and CD Sales, Again

Andrew Leonard writes "Stan Liebowitz, an economist studying the effects of file-trading on the music industry, says in an article in Salon that new numbers have convinced him that the decline in CD sales may be partially attributable to MP3 downloading. But he also argues that the decline does not justify draconian new laws."

Comments

Obviously, it does affect CD sales to SOME extent!

[izx]

You're always going to have the unethical/innocent geek kid who downloads an MP3 and listens only to it since his PC, MP3 player and PDA are the only things he uses for listening to music.

You're always going to have the normal guy who doesn't care about "branded" CDs or the slight (and sometimes perceptible) quality loss of MP3s over CDs...he goes ahead and burns his MP3s to a 5-cent CDR and listens to it anyway.

You're always going to have the fellow who likes to support artists, and buys original CDs. Catch? He now listens to MP3s to sample new albums. He doesn't like the sample...he doesn't buy the CD. Whereas earlier he would be stuck with the CD as a sample (no CD returns!), he is now a "loss" to the music company.

The horse is dead

[ObviousGuy]

Please, stop beating it.

Get a clue

[Anonymous Coward]

The guys a moron. His model says a recession doesn't affect sales much, therefore any bigger drops must mean something like MP3s have an effect. Maybe yer model sucks! A 5% change in income may be nothing if your making $100K/yr, and devastating if your making $15K/yr.

Oh well, I also hate the assumption that if I got if for free, then it's lost revenue, when I would have gone without rather than pay for it.

blah blah blah

Who cares anymore

[Anonymous Coward]

When this question was first posted, (in about 1982), I gave a full, comprehensive answer.

However, it's gone on, and on, and on. So, can we just, for once, sum up:

Yes, downloading music from the internet hurts CD sales. Of course it does, but so does listening to the radio, and so do blank cassettes and mini-discs. It also helps to promote CD sales, in the same way that radio, tapes, and minidiscs so.

Nobody will *ever* be able to do a comprehensive study of this, because it depends who you ask. Ask a load of geeks, and they'll probably say that yes, they do download MP3s, but the quality is inferior, so they buy the CDs they can afford. They will proably also mention that CDs are overpriced, and that on a technical note, just about any copy protection could be broken.

Ask the average 'man in the street', who is computer-literate, and he'll probably say, yes, he does listen to MP3s, and that he doesn't even care whether he is infringing copyright or not, because he doesn't really know much about it. He probably thinks of downloading music as being as bad as copying a friends CD.

Personally, I think that people should stop trading music illegally, and put pressure on local shops to allow previewing of CDs. Otherwise, you're just playing in to the hands of the record companies.

Oh, and as for the people who complain about the inferior quality of copy protected CDs, most of you are lying, especially when you listen on cheap speakers, about 5 metres from a pnumatic drill. It is more to do with incompetent recording engineers who know nothing about how to master a CD, (over compressing it, normalising the tracks unnecessarily, letting the level repeatedly hit 0dB on the masters, etc, etc).

Internet, not MP3s, is hurting CD sales.

[InnovATIONS]

Back when I was in high school we taped our albums (yeah, I'm old, the vinyl things) onto cassettes and shared them around with friends. We could share with maybe a half dozen friends at most and, most importantly, we were spending as much as our various part time jobs, allowances, etc. would spare. One album was serving about six of us and, this is the important part, we were spending as much as we felt we could budget from our incomes.

With the current generation of high school students, a great many of them think 'why spend ANY money on recorded music at all?' They get all of their music off of the internet and divert their recreational dollars to video games or DVDs or whatever. One albun sale is not being shared among a half dozen friends but 'shared' among ten thousand strangers.

Stan Liebowitz - an embarassment to Dallas Edu

[NexusTw1n]

Stan Liebowitz, author of an upcoming book (set for publication Sept. 7) titled "Rethinking the Network Economy," is digging hard for quantitative answers.

So, not looking for free publicity to boost book sales then.

In May, Liebowitz published a paper suggesting that the record industry would soon be seriously harmed by MP3s. But in June, by the time Salon caught up with him, he was questioning his own conclusions after having examined the numbers and finding little solid proof that file sharing was hurting CD sales. Two months later, he's changed his mind again

So, this respected researcher has changed his mind three times in 4 months . Perhaps he should think and formulate a well conceived, intelligent opinion before opening his mouth next time - is this guy the salon version of the first post trolls ?

You don't publish a paper, then change your mind about your own conclusions less than a month later, then change your mind yet again, and expect to be taken seriously.

If it were the case that there was a 9.8 percent drop on albums, when you look at the historical record of the ups and downs of the CD industry, [that's] a bigger decline than we've seen in 30 years. It starts to look unusual.

Except, that a) we're in a recession, b) teenage disposable income is now spilt between DVDs, Games and CDs c) bland mass appeal music always sees a drop in sales - see the RIAA's "Home taping is killing music" campaign in the late disco, pre punk era.

If he thinks the drop is unusual then he isn't checking his historical data correctly. In addition, how can he explain the INCREASE in CD sales in the UK last year ? We have Napster too yer know.

It's really amazing how (CD) prices have tracked so closely with inflation. It's almost as if the industry just bumps up prices with the inflation rate
No shit Sherlock...

[What is clear is that] there's no evidence in the data that the tapes caused a decline.

MP3s wouldn't do the same thing. The reason cassettes led to growth was that before cassettes existed, you didn't have portable music. You couldn't play recorded music in your car, and you couldn't play it walking around, in a Walkman. It was the little cassette that basically allowed you to do that. To be technically correct, there were 8- track players prior to cassettes. But they didn't have quite the same penetration. My theory as to what went on is that [the rise in cassettes] coincides almost perfectly with the penetration rate of the portable, Walkman-type of thing. So it opened up this whole new market, which overwhelmed any copying that went on.
Oh dear.

Well 1) Most people didn't have recordable 8 tracks, so no, the 8 track WASN'T the same as musiccassettes. 2)We have new mediums now, such as the MP3 player, so according to your "theory" that should overwhelm any copying.

If people bought albums in the 80's specifically for the purpose of taping them for their new toy the walkman, then isn't the same going to happen now ? We should see an increase in up tempo running/jogging music, with the advent of solid state MP3 players which are finally immune to jumping, skipping and damage from violent movement.

So, either I'm going to see lots of hard cord techno stars from Germany and the UK become millionares as their record sales boom, or I'm going to see you change your mind about your pet theories yet again, probably just in time for the official release of your book.

Did Stan escape from Dallas University's, locked room, infinite monkeys on typewriters experiment ?

Re:Stan Liebowitz - an embarassment to Dallas Edu

[mc6809e]

So, this respected researcher has changed his mind three times in 4 months . Perhaps he should think and formulate a well conceived, intelligent opinion before opening his mouth next time - is this guy the salon version of the first post trolls ?

Honest researchers change their minds when new data suggests that they should. They don't hold on to pet theories if the data contradicts those theories, you idiot. Thats what makes him a degreed economist and you a moron.

Just because you don't like what the evidence might suggest doesn't mean he's wrong.

"If it were the case that there was a 9.8 percent drop on albums, when you look at the historical record of the ups and downs of the CD industry, [that's] a bigger decline than we've seen in 30 years. It starts to look unusual. "

Except, that a) we're in a recession, b) teenage disposable income is now spilt between DVDs, Games and CDs c) bland mass appeal music always sees a drop in sales - see the RIAA's "Home taping is killing music" campaign in the late disco, pre punk era.

He just said it looks unusual in the past 30 years -- 30 years which include recessions, splits in teenage income, and changes in mass appeal. He's already taking into account these things. Christ, you're stupid.

Re:Stan Liebowitz - an embarassment to Dallas Edu

[elflord]

So, this respected researcher has changed his mind three times in 4 months .

WRONG. This might be news to you, but there is some latency between having an opinion, and having that opinion published in a journal. The submission/review process is quite lengthy. I would guess that it took about 6 months, and the research took a few months also. To the extent that he "changed his mind", he probably did so over the period of close to a year.

Perhaps he should think and formulate a well conceived, intelligent opinion before opening his mouth next time - is this guy the salon version of the first post trolls ?

I'm going to momentarily ignore the fact that this viscious verbal assault is based on a false premise, and address the fact that he re-evaluated his position.

Unlike the slashdot herd, he is constantly re-evaluating his position with a critical eye and some intellectual honesty, instead of foaming at the mouth and spewing dogma. This is what scientists are supposed to do-- think critically, as opposed to spewing dogma. Far from completely changing his mind, these apparent changes are really a gradual convergence towards him converging to the truth. At first, he had some argument that it would hurt the industry. Further analysis offered a possible counter-argument to that, but an appraisal of that counter-argument showed that he had it right the first time.

You don't publish a paper, then change your mind about your own conclusions less than a month later, then change your mind yet again, and expect to be taken seriously.

I don't see why you can't offer counter-arguments to your own writing. To do so is the hallmark of intellectual honesty, something that you mistakenly consider to be a weakness. It's not like he's doing a complete U-turn.

Except, that a) we're in a recession, b) teenage disposable income is now spilt between DVDs, Games and CDs c) bland mass appeal music always sees a drop in sales

The crux of his argument is that this is not the case, or to be more precise, recessions hurt music sales, but they don't hurt them that much. Ranting on slashdot that it isn't so is not much of a rebuttal.

2)We have new mediums now, such as the MP3 player, so according to your "theory" that should overwhelm any copying.

That's not true. The MP3 only provides a new medium, but the cassette provided new functionality. That is, the point of the cassette is that you didn't have portability before then. Of course MP3s also offer portability, but that portability isn't new anymore.

If people bought albums in the 80's specifically for the purpose of taping them for their new toy the walkman, then isn't the same going to happen now ?

Yes, but this won't result in an increase in sales, because they could already buy albums to record for the purpose of jogging. The only difference is that there will be a new mediium. Or to put it another way, MP3s do not create a market that didn't already exist (or at least, you have not argued that this is the case)

Re:Stan Liebowitz - an embarassment to Dallas Edu

[NexusTw1n]

The submission/review process is quite lengthy. I would guess that it took about 6 months, and the research took a few months also. To the extent that he "changed his mind", he probably did so over the period of close to a year.

Except he changed his mind yet again, within 2 months - June - August. I don't expect him to stick dogmatically to one opinion - I do expect him to perhaps stop giving book sales boosting interviews if his research is so inconclusive as to cause him to change his mind every other month. Admitting you were wrong is laudable, admitting you were wrong, "no I wasn't", "Yes I was" "I was wrong about being wrong", "I was wrong about being wrong about being wrong" just makes you look stupid. A researcher not looking for regular press interviews would have reached the conclusion that research into this area is inconclusive.

It's not like he's doing a complete U-turn.

But he did offer a U-Turn, then U-Turned back, in the space of 2 months. . Re-evaluting your position is all well and good, but if you can change your opinion so easily and quickly and regularly, then perhaps a little more thought is needed before publically making a statement is required. I'm a lecturer, if I publish a paper, go on record as stating my paper is now wrong, then a few weeks later go on record as stating my previous statement about being wrong, is wrong, I am going to look like an idiot to my peers, it's going to look like I'm publishing before I'm ready, just to get press.

he crux of his argument is that this is not the case, or to be more precise, recessions hurt music sales, but they don't hurt them that much. Ranting on slashdot that it isn't so is not much of a rebuttal.

The crux of his argument is that MP3 downloading seriously damages sales. It isn't so.
Perhaps the BBC is "ranting" also ?

"The CD market in the UK has bucked the downward global trend and enjoyed a bumper year, with sales increasing by more than 5% in 2001".

As I stated - the UK had Napster, Guntella, WinMX, Musiccity and so on, yet UK sales increased by 5% last year. Or is Great Britain a statistical blip in Stan's ever changing world view ?

Yes, but this won't result in an increase in sales, because they could already buy albums to record for the purpose of jogging. The only difference is that there will be a new mediium. Or to put it another way, MP3s do not create a market that didn't already exist (or at least, you have not argued that this is the case)

Wrong.

As I previously stated - Solid state MP3 players allow people to jog or do violent exercise, where previous walkmans, discmans, mini-disc players and so forth would jump and skip. Therefore, the MP3 player is a new medium, and music ideal for such activity - 140 BPM 4/4 beat techno, should see an increase in sales, based on his argument that a new medium results in new sales.

The fact is, for every RIAA sponsored study that states the MP3 format is killing music, another study will prove otherwise. An academic who changes his position with the changing of the seasons, openly plugging a book every time he does so, rather than arguing that research is currently inconclusive, is worthy of scorn.

Re:Might it possibly be....?

[Alsee]

boycott the RIAA?

Heck, you can throw away the term "boycott".
I'd say that part of the reduced sales is simply "pissed off customers".
And it's not like there's a single reason for people to be pissed off, take your pick:

(1) Irritating the hell out of everyone by inturrupting the grammy's with a stupid-ass antipiracy speech.
(2) Numerous prominent artists publicly complaining about RIAA's hideous contracts and treatment of artists. Everyone particularly loved the "10% breakage allowance" on CD's deducted from artist royalties.
(3) Pricing.
(4) Packaging (in particular a desire for singles).
(5) Killing Napster.
(6) Having no respect for the customer.
(7) Reffering their customers pirates and thieves.
(8) Making legal threats against a college professor for presenting research at a science conferrence.
(9) releasing (mostly planning to release) crippled CD's.
(10) Pushing for a law allowing them to hack people's computers.
(11) RIAA's "work for hire" bill, a proposed copyright amendment which would steal the permanent right to songs from the artists and hand it to the labels.
(12) Federal Trade Commission finding the Recording industry cartel anti-competitve and engaged in illegal price-fixing.
(13) Hiring companies to flood P2P networks with bogus files.
(14) Failure to keep up with reality and sell music downloads (their sorely belated attempt at this was nothing short of insulting).
(15) I still blame them for killing Digital Audio Tape, a perfectly good technology. The Audio Home Recording Act mandated that it must include DRM and that cassettes and players carry a tax to balance piracy estimates. The DRM made it useless and the tax inflated the prices.

And those are just the ones off the top of my head. I'm sure there's plenty more.

-

Lies, damned lies and . . . .

[Aliks]

I wouldn't expect too much from statistics and economics. The problem with these studies is the poor quality of the numbers that are available.

In the case of music sales, the industry has a long history of manipulation of sales figures to support various ends. With the recent focus on bogus corporate accounts, I think its gong to be very difficult to get a clear picture.

If the music industry wants to claim that file sharing is hurting sales, I would expect them to bend the numbers to prove this.

It's not the MP3s, it's the CD-R drives...

[tRoll with Butter]

BEFORE Napster hit the scene, I got a Memorex 1622 CD-RW drive (Amazingly, they're also the subject of a major class action law suit at the moment...) and used it to burn copies of EVERYTHING for all my friends.

It still all revolves around CD burners. Take the current MP3 situation and subtract being able to burn CDs. Sure, there's portable MP3 players, but the REAL album-purchase-killer is being able to actually have that shiny disc with the music on it in your hot little hands. Most of my friends who aren't interested in computers know that us computer geeks can burn CDs and won't hesitate to ask for a copy of the latest albums or songs they can't get out of their head.

Do you actually tell your friends that they have to go out and spend money on something you can burn for them on an inexpensive blank CD? "Come on, you're supposed to be my friend... Help me out here." Unlike home taping of the past, CD-RW drives have become VERY fast as of late... A C90 tape actually took 45 minutes per side (yes, it had to be flipped) to record, a 40X CD-RW can burn an entire CD in less than 8. CPUs have become much faster as well. It's become a whole lot easier to fire up your CD-R mastering software in the background and burn CDs while you're say, reading Slashdot.

When a friend asked for a copy of a tape, it meant rewinding, analog distortion, getting the levels right, and FLIPPING THE DAMN TAPE. Burning is just a blank CD and a few clicks away.

Re:Might it possibly be....?

[shut_up_man]

17) Downturn in the economy hitting luxury items like CDs
18) End of the "rebuy music collection on CD" era
19) Massive rise of computer gaming as a major money industry, competing with music

They lost my business

[_ganja_]

RIAA certainly lost my business indirectly due to file sharing, you see when an industry treats me like a criminal I very quickly stop being a customer.

The only thing I regret is buying all the CDs I did before I saw the RIAA's true colours.

hypocrisy

[hrm]

It seems to be that the Slashdot-Correct way of thinking is to say that the music distributers brought these problems on themselves. But I don't think they're entirely to blame. Cheap bastards like me have something to do with it as well.

I don't mind admitting that these days I only go out to buy a CD if, after arsing around with gnutella for a day or two, I still haven't found it. If there was a "perfect" file sharing network, I'd never buy a CD again.

You might say, "you do this because CDs are overprized" (even more true here in the Netherlands than in most other parts of the world). To which my honest reply would have to be, "if CD prizes were cut by 50%, I would only cut the time I spend trying to find one on the net by 50% before giving up and buying it".

My bottom line is, if p2p networks worked perfectly, I'd never pay for music, regardless of how reasonable the price might be.

Re:hypocrisy

[Jesus IS the Devil]

Yes this is the type of honesty I respect. I see lots of people using excuses to justify what they do... when in fact most are probably just fooling themselves.

Re:hypocrisy

[tempest303]

Well, at least you're honest... I wish more people could at least admit that if they could download full quality, complete albums, with a good selection and good speeds, that they'd never pay for music again, because in a lot of cases, it's the truth. I only wish people would at least 'fess up and stop making fucking excuses and laying the blame on someone else.

On the other hand, fuck you for being a cheap sod and making it hard for music lovers who actually want to give something back, and giving the RIAA an excuse to DRM the fuck out of everything.

Re:hypocrisy

[VB]

Thanks for being honest. The only way these artists make any decent money is to gig anyway, which is the most fun part of being a musician, to me. It's also a shame they don't own their song rights anyway, so really you're only hurting the very industry that's turned it's back on artists to their own avarice...

Do you buy CD's from independent artists you see about town when you go out? Or, do you not check out local bands? Just curious...

Stating the obvious...

[Jugalator]

"Stan Liebowitz, an economist studying the effects of file-trading on the music industry, says in an article in Salon that new numbers have convinced him that the decline in CD sales may be partially attributable to MP3 downloading"

Well, *of course* it's due to mp3 downloading. The question they should ask themselves is: WHY are the mp3 downloaded so much? Because we don't care about the artists and like to get free music? Or because we don't think there is any other options because of high prices where a big percentage does NOT go to the artist?

RIAA acting as cartel is the problem!

[MtViewGuy]

(12) Federal Trade Commission finding the Recording industry cartel anti-competitve and engaged in illegal price-fixing.

That is EXACTLY the problem we're still facing in the record industry. I believe it's high time the Antitrust Division of the DoJ go after the RIAA and force them to lower album-length audio CD prices to around US$11 per disc; the current US$18 per disc price is at a point where there is just too much economic incentive to pirate music. A good comparison is OPEC; in the late 1970's they raised prices so high that people were either reducing oil consumption and/or looking for alternate sources of oil. By 1986, OPEC was in dire straits due to economic realities catching up with them.

Compare this against the movie industry. The fact that new-release DVD movies are between US$20 to US$30 per release set is extremely reasonable, especially when you consider new releases often contain a plethora of extra features in regards to the movie. And you can often get older movie releases for under US$15. At these prices, there is no real incentive in making a pirate copy DVD, to say the least.

I'm sure it has in SoundScan and RIAA measures

[Ex Machina]

Being able to listen to hundreds of bands has changed my musical tastes to rarely include any major label bands. Since many of artists are obscure and not even available I end up purchasing them at shops that are not part of the SoundScan program.

Re:Might it possibly be....?

[Anonymous Coward]

(15) I still blame them for killing Digital Audio Tape, a perfectly good technology.

Sort of. Truthfully I'm sort of glad DAT never made it big. While I finally just replaced the tape player in my car with a CD player (2 days ago), I'm glad tapes are gone. Fast forwarding is a pain in the ass compared to pushing a button on a CD player. Tapes, stretch, get eaten, etc. I think if DAT tapes had become more mainstream, then the push for CD-R technology might not have caught on as well as it has.