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Study: MP3 Sharing Not Serious Threat To CD Sales

Posted by timothy on from the problem-with-static-worldviews dept.

pkaral writes "The two distinguished gentlemen Strumpf and Oberholzer-Gee have most likely made RIAA executives choke on their lunches. Those two economists at Harvard and UNC-Chapel Hill have done the research and the math on how much CD sales are actually hurt by P2P sharing. The answer: A whopping one CD per 5,000 files downloaded. Needless to say, RIAA are already trying to discredit the study."

22 of 704 comments (clear)

  1. I expect... by inertia187 · · Score: 5, Insightful

    Now I expect a full apology and retraction for the demonization P2P has gotten from the RIAA, et. al. They should be trying to increase downloads like radio stations try to increase listeners.

    Record labels should distribute approved MP3 tracks, then offer them as singles on CD, just like the radio stations. They should closely scrutinize the downloading habits, then create an album based on the popularity of certain tracks.

    They don't see this as a tool, only as a threat. They're idiots.

    TV Production should do this too. If Viacom released official BitTorrents of Enterprise, complete with banner ads at the bottom of the screen, I'd download them. The banner ads would make me more likely to delete it when I'm done watching it, which is what they'd want, right. Then they can still sell me the DVD.

    That'll probably never happen, though.

    --
    A programmer is a machine for converting coffee into code.
    1. Re:I expect... by American+AC+in+Paris · · Score: 5, Insightful
      No, they probably do see it as a tool, but a tool that they need to keep a close eye on.

      Their logic probably goes something like this: so long as we can keep making people feel guilty/nervous about filesharing, we'll be able to keep P2P as a promotional tool while minimizing the risk of it taking over as the best way to get music.

      They'd never say this outright, of course, as it'd undermine their PR campaign against P2P. But so long as they keep P2P flooded with crap and pursue the occasional lawsuit, they'll be able to reap the benefit of filesharing without having it grow into a serious replacement for their distribution models.

      They're not idiots, they're cutthroat businessmen. They care about lots of things, but in the end, making money trumps all other concerns.

      --

      Obliteracy: Words with explosions

    2. Re:I expect... by OoSync · · Score: 5, Insightful
      They should closely scrutinize the downloading habits, then create an album based on the popularity of certain tracks.

      They don't see this as a tool, only as a threat. They're idiots.

      Actually, the real fun with the RIAA and major labels is that they already do such things. Please view the Wired article:
      BigChampagne is Watching You.

      I say this is fun because the RIAA talks out both sides of its mouth: it wants to limit major expansion of free P2P downloads (control the download market) and simultaneously use the data from such spontaneous sources to make smart investments on marketing.

      Of course, when they say "CD sales" have gone down, I'm not so sure they mean all CD-based formats (singles, albums, collections, etc.) or just some sub-categories, like CD sigles. I can believe CD singles have been decimated by P2P filesharing, but I'm more reluctant to agree to a rapid, major decline in album sales without proper evidence. In other words, I don't believe what the RIAA claims is exactly what is happening, merely what they want you to think is happening.

      --

      I always get the shakes before a drop.
    3. Re:I expect... by RickHunter · · Score: 5, Insightful

      True. On the other hand, this would allow you to release songs that wouldn't ordinarily go on your records AND give you actual data (lots of people downloaded this song and e-mailed me to tell me they liked it) to use to fight the record company. Which is another reason why they're scared of P2P. They're afraid that artists wouldn't have to rely on their nebulous marketing data and might actually have some say in their music.

    4. Re:I expect... by Tin+Foil+Hat · · Score: 5, Insightful

      Most of the popular music sold at mass market venues are highly produced and engineered with the purpose of selling as many albums as possible. Unfortunately, that often leaves little room for artistic expression. That is not to belittle the talent of the artist, but to recognize a greater reality in that market: that business is business no matter what the atistic merit of the product.

      If you are aware enough to recognize art when you see or hear it, you are also aware enough to seek out venues that feature such artists. Such venues do not cater to mass marketing. These are the bars, honkey tonks, indie recording labels that have been showcasing the best artists for generations. You find them at the edge of the university district, in the raucus dives, the after hours clubs, in the back of the local news rag that nobody really reads, and in the small record stores in the old strip mall downtown.

      The major labels are good at doing one thing well, and only one thing, and that's making money. Don't let them kid you, even if CD sales are falling, they are still making money hand over fist. They will try to tell you that since this years take is smaller than last years take, they have somehow lost money. That is simply not true. They have made money, just not as much as last year. Boo Hoo.

      If there are any record RIAA executives reading this comment, this is for you: "It's the ECONOMY, stupid!"

      --
      No matter how many of my rights are taken away, somehow I still don't feel safe. -Frigid Monkey
    5. Re:I expect... by IWorkForMorons · · Score: 5, Insightful
      Alright, if I could mod this, I'd give it a Funny mod. You've got a point. A lot of it is speculative, because it hasn't happened *yet*. At least not in the TV and Movie arena. The DMCA is doing a pretty good job of allowing companies to sue people in order to prevent them from showing you how to use a Sharpie to disable the DRM on a CD though. It could be used in the same way by TV and movie producers. Oh wait, that's right...the movie guys have already done that (*cough* *cough* *DeCSS* *cough*). And they've already gone through the licencing thing with TV and radio. Why do you think you have to pay for a *broadcasting* licence?

      An example is a friend of mine's mother. She loves religious shows. But where she lives she can't get any. And she can't afford a dish. So a friend of her's set up a transmitter at his place, which was a few miles away, to broadcast the religous channel from his dish. All she had to do was tune in to his transmitter. It didn't take long for the cops to shut that down, with orders from the CBSC. He didn't alter the programming in any way. The channel was broadcast in full, commercials and all. But he wasn't allowed to rebroadcast it, because he didn't have a licence to...

      Yeah, sure...a lot of what I said is the tin-foil hat kind of rant, but just because I'm wearing a tin-foil hat doesn't mean I'm not telling the truth...

    6. Re:I expect... by 13Echo · · Score: 5, Insightful

      I believe that the biggest issue is that it is a tool that they *don't control*. They're losing their power over distribution, very rapidly. Even if people are still buying CDs, what does the future hold when traditional music companies are replaced by alternative means of music distribution?

      They traditional record label and its goons aren't needed anymore. They're becoming extinct.

      The answer is in my sig.

    7. Re:I expect... by tanguyr · · Score: 5, Insightful

      It;s probably worth pointing out that P. and Britney are making the recording industry a hellova lot more than you are.

      "Of thirty thousand CDs that the industry released last year in the United States, only four hundred and four sold more than a hundred thousand copies, while twenty-five thousand releases sold fewer than a thousand copies apiece. No one seems to be able to predict which those four hundred and four big sellers will be."
      - source: The Money Note, by John Seabrook

      RIAA execs don't lie awake in bed worrying that in 10 years times, sales will have been cut in half by P2P.

      Unless their cluelessness approaches nearly mystical levels[1], recording industry executives know that digital distribution is inevitable. Sure, they're probably a bunch of old white guys who never heard of the internet before 2001, but that was three years ago, and you'd better bet they have *some* smart people working for them. Fact: digital distribution of music is more efficient than physical distribution - i can download a much wider selection of songs, at any time of the day or night, than i can get at the record store, and i live in a capital city. Imagine if you live in Armpit, Ar.

      But gearing up for digital distribution is going to take a) time and b) money. Time because not everybody has broadband yet - especially when you figure that, to these guys, the market is worldwide. Money because somebody has to invest in the infrastructure to make all this possible. Ask Apple how much they spent on their music store. On the other hand, the infrastructure for doing business in the bricks and mortar world is pretty much paid off and the profit margins are fat.

      The recording industry is squeezing every last cent of profit out of their current way of doing business before they switch to digital delivery and start all over. What keeps them awake at night is the idea that by the time they get there, sharing on p2p will have changed people's value perception of music: that they will think of it as something you get for free on the net.

      They instead lie awake in bed worrying that in 10 years time, artists will deliver their music straight from the recording studio in their attic, through the server in the basement, to their Internet based community of fans.
      In any market with many producers and many consumers, middlemen will always emerge. Over time, seeking to maximize profits by reducing inefficiency, these middlemen will be reduced to a few big players. Once this happens, these big players will start to exhibit monopolistic/oligopolistic behaviour - they will think of the market as "their market", not in terms of the market they compete in, but in terms of the market they own, like a private club. Eventually, this behaviour will distort the market and decrease the gains to the producers and consumers - thus providing incentive for somebody to offer an alternative. If that alternative proves profitable, copycats emerge and the power of the old middlemen diminishes until they are driven out of business (in their current form: they usually become just another copycat, vis. Barnes & Noble) and the market is governed by the new middlemen. Over time, seeking to maximize profits by reducing inefficiency, these new middlemen will be reduced to a few big players....

      Of course: i could be full of shit. "Professional" musicians have existed for thousands of years, whereas the recording industry hasn't. Then again, how many troubadours in the middle ages lived in castles? Only the ones who worked for the king.

      [1]"No one in this world ...has ever lost money by underestimating the intelligence of the great masses of the plain people. Nor has anyone ever lost public office thereby."
      -- H.L. Mencken

      --
      #!/usr/bin/english
  2. I think its helped the music industry by queen+of+everything · · Score: 5, Insightful

    I have found out about so many bands that I like that I would buy their cds or see them in concert because of mp3 sharing. I never would just go buy a cd of some band I have never heard of; but I can download an mp3 or 2 and discover that I really like the band. I'm glad that there are people studying it from the opposite angle of the RIAA.

    --
    "Wisdom is not a product of schooling but of the life-long attempt to acquire it." -Albert Einstein
  3. Promotion vs. Sales by LostCluster · · Score: 5, Insightful

    Free over the air radio has always been considered a promotional vehicle for music artists, that hearing a song on the radio is more likely to inspire sales than prevent it.

    More or less, at this 1 CD per 5,000 downloads number, downloading is being called a push, it gives just about as much as it takes away from the recording industry.

    I think what the RIAA is really scared of is the fact that P2P distribution might allow an artist to gain fame and make money without going through the "major label system" and that'd be the death of that system. So, it's not that P2P threatens CD sales as much as it threatens RIAA-member CD sales by replacing them with something else.

  4. Well... by hermeshome.se · · Score: 5, Insightful

    There are probably no study in the world that could convince RIAA that P2P is good for business. They've made up their minds.
    BUT, it might convince lawmakers to whink twise, and it shows the common man what they already know: if you want something that is good, you'll pay for it. If you got a broad selection to sample, you'll more likely find something YOU like.

  5. The cause of lagging CD sales.. by CharAznable · · Score: 5, Insightful

    is of course lagging music quality! If Metallica's St. Anger is not selling like hotcakes it's because it's abject, utter crap, not because you can get it for free on the internet.

    --
    The perfect sig is a lot like silence, only louder
  6. Re:Embrace, not extinguish by LostCluster · · Score: 5, Insightful

    The real problem from the RIAA members is that they've invested millions in CD-pressing plants, and they're not interested in letting that barrier to entering the market go down so easy. If anybody with a $99/mo. simple webserver can distribute music and get their songs picked up by the radio, then the size of the pie will stay the same, but the RIAA members will each end up with smaller pieces because of all the new players that take little bits.

  7. What is? by timothy · · Score: 5, Insightful

    "Its still piracy," you say. What is?

    Do people illegally download copyright material? Sure. But --

    Is it piracy when I download out-of-copyright old radio programs*? Or sample songs from bands who specifically encourage this? What about lectures stored on a Morpheus server in L. Lessig's campus office? :)

    Both "downloading" and "p2p" can mean a lot of things. I plan to buy a CD of Nero Wolfe MP3s in part because of the excellent episodes I've downloaded so far.

    Ah, well.

    timothy

    * Orson Welles' radio stuff is pretty incredible; his presentation of Dracula in particular is great

    --
    jrnl: http://tinyurl.com/c2l8yr / foes: http://tinyurl.com/ckjno5
  8. Optimist (was Re:Well...) by keirre23hu · · Score: 5, Insightful

    The only thing that will convinve legislators to choose the common man over the recording industry is an equally funded lobbying group... not likely

  9. Re:Hilarious. by rabel · · Score: 5, Insightful

    I think the point is that this is a study by a couple of guys that can most likely be considered "unbiased" since, well, since there isn't really any money to be made by supporting P2P file sharing.

    Most other studies that show the P2P is hurting CD sales are put out by folks that are either paid by the record industry or can be otherwise deemed uncredible.

    Oh, and /. readers are certainly biased... just making the (obvious) point that there's a reason why what appears to be an unbiased study is pounced on by the readers here.

  10. Re:MP3 Sharing is Still Illegal!! by Bonewalker · · Score: 5, Insightful
    Maybe its not a threat economically, but your still enjoying the fruits of the musician's labor without paying for it.

    Doesn't this same thing occur every time you listen to the radio?

    You might say no because there are advertisers who are paying for the space, which the radio station then gives a portion to the music industry, thus paying the artist back...a pittance.

    Well, consider this. By downloading a song, many people, according to the study, often go purchase cd's from these artists whose music they have enjoyed for free. This is even better for the artist because they get at least a little more because it is direct revenue for them and the music industry.

    Another example, you can go check out a book from the library for free and read it in its entirety. For free! Not a single cent goes to the author. Yet, you're still enjoying the fruits of the author's labor without paying for it.

    Open your mind, see the possibilities.

  11. Re:Its still piracy by dmeranda · · Score: 5, Insightful

    It's neither piracy or stealing, it's called "copyright infringement"...that's the term the LAW uses exclusively. And even then, it's only for those cases of P2P exchange which are done outside of the allowable exemptions to copyright law.

    If nothing else, this study even deflates the already weak argument that P2P is "stealing", because the argument used to be that by downloading you are "stealing" the potential income of artists. Well, without the economic argument now, then what exactly is stolen? There is nothing missing.

    You're correct in pointing out that 1/5000 is still a significant number. But also that the study does not concentrate on the other side; that P2P may inspire sales that never would have been made.

    The funny thing, but not unexpected, is that most businesses would be jumping for joy if a study like this came out. That percieved threats to your business in fact turned out not to be that bad after all. The RIAA/MPAA *should* be pleased by this study. IF it was about economics. But their reaction shows that it's not about the money at all, it's about their ability to totally control and manipulate human behavior and destroy capitalism, e.g., power.

  12. This is probably true by .nuno · · Score: 5, Insightful

    I stopped downloading mp3s regularly already some time ago (about 2 years) not really because I was afraid of the RIAA/MPAA/whomever_else, but rather because I was tired of downloading Jason Donovan's latest hit under the name Rolling_Stones_Start_Me_Up_Live_In_Birmingham.mp3.

    During the 3 year period where I did use Napster (and Kazaa later on) to download mp3s I bought the bulk of my 250+ CD collection, mostly of bands that I had initially heard via P2P. In that sense, it did work a bit like radio.

    Not unlike many others, I also burned CDs with those MP3 files, but there's nothing like owning the real thing(TM) so I ended up buying the CDs of bands that I really liked.

    This has been said (only today) already about 300.000 times but I'll say it again (this is /. after all):
    When will ??AA realize that CDs don't sell because:
    a) sometimes the music does suck
    b) we all get the feeling of being ripped off when paying 20 EUR+ for any CD or DVD, especially knowing how much of that goes to the artist
    c) trying stuff is something you have to do. Would you by a new pair of trousers without trying them first? Would you buy a car you never drove?

    --
    .sig
  13. RIAA vs GPL by levram2 · · Score: 5, Insightful

    RIAA has restrictions that you can't distribute the music they produce. The GPL has restrictions that you can't distribute binaries without giving access to the source code. Downloading music withot paying for it is morally equivalent to using the GPL in closed source products.

    If you don't agree with the license, don't use it.

    Hurt the RIAA by stop using their music.

  14. I am not surprised by Tangurena · · Score: 5, Insightful
    In my own experience, I used napster to find songs that my local radio stations would not play. I used napster to track down interesting new music, and then go purchase the albums. This led to me purchase between 5 and 20 albums per month.

    As Napster became more and more vilified, companies refused to let employees use napster at work. As a result, by the end of 2001, I was no longer able to use it at work (and had dial up at home, so the time it took to screen potential candidates was approaching an hour per song). With the covert and overt poisoning of tracks placed for sharing, it is not worth my effort to sift through the trash in the hopes of finding gems.

    Since being unable to hear new music due to the interference of the record industry (and its cronies BayTSP and congress), and the concentration of ownership by conglomerates like Clear Channel, all the radio stations are becoming the same play list. As there is no way for me to discover new music worth listening to, my purchases of albums dropped from 200+ per year in each of 1999 and 2000 to 1 album in 2002 and zero in 2003. I have about 700 CDs, enough CDs that I probably do not need to purchase any more for the rest of my life. Since the record industry is determined to prevent me from discovering new music, it looks like I already have a lifetime worth of music. From 200 albums per year to zero, the RIAA has decided that I do not need to buy any new music ever again.

    What could convince me to buy more albums? I would have to find stuff worth listening to. I enjoy classical, techno, jazz, new age, folk and stuff that gets called world. With the exception of 2 spanish language stations, my local radio stations only play country, pop and rap. The spanish language stations have more interesting music than the english language ones. Guess I need to brush up on my spanish.

    The current distribution system for music is BROKEN. Existing and proposed legislation just serves to enforce and prop up a distribution system that was (and still is) corrupt and crooked for the last 70 years. I chose to not support the corruption with my money. I chose to not support the crooked politicians who dance to the tune of the RIAA. It is my money and there is no law requiring me to subsidise their corruption, not that it would be a constitutionally valid one even should one exist.

    Unfortunately, the RIAA have painted themselves into a corner with the jihad they have declared against P2P. There is no possible way for them to admit their mistake without them losing billions in the RICO lawsuits that would result. Unfortunately for the RIAA, it is them or America, and and currently, the RIAA is winning the propaganda battle while subverting the justice system of the US. It is as corrupt and evil as if AlQeda was in charge of the White House.

  15. Copyright, in the right hands... by Dorf+on+Perl · · Score: 5, Insightful
    Copyright is good when it is in the right hands: those of a work's creator(s). Unfortunately, many artists have been/are being forced to enter the music market through the "loving" hands of the RIAA member companies, where they lose important rights ("voluntarily," of course).

    A work's creator, and only the creator, should have full control of the work's copyright for a strictly limited time, after which the work should enter the public domain. This is all just my opinion, and is an awful lot of shoulding, but there it is.

    Also, I haven't seen this suggestion here before, but if you want to try out different artists/genres/whatever, and if you live near a half-decent public library system with half-decent interlibrary loan services, you can check out CDs instead of (at the moment) illegally copying them.

    Just my 2 cents worth (for large values of 2).