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The Economics of P2P File-Sharing
brajesh writes "Does P2P file-sharing really affect music sales and in what ways? According to a blog entry at "The Long Tail", a paper from David Blackburn[.pdf], a Harvard PhD student, on the economics of P2P file-sharing concludes that it does indeed depress music sales overall. But the effect is not felt evenly. The hits at the top of the charts lose sales, but the niche artists further down the popularity curve actually benefit from file-trading. Form the paper - "Artists who are unknown, and thus most helped by file sharing, are those artists who sell relatively few albums, whereas artists who are harmed by file sharing and thus gain from its removal, the popular ones, are the artists whose sales are relatively high." But then "File sharing is reducing the probability that any act is able to sell millions of records, and if the success of the mega-star artists is what drives the investment in new acts, it might reduce the incentive to invest in new talent. This is, at its heart, an empirical question which is left to future work." There is also another compilation of studies on economics of P2P."
The hits at the top of the charts lose sales, but the niche artists further down the popularity curve actually benefit from file-trading.
From each according to his abilities; to each according to his need. Lighten up--it's a joke!
"File sharing is reducing the probability that any act is able to sell millions of records, and if the success of the mega-star artists is what drives the investment in new acts, it might reduce the incentive to invest in new talent."
So what this is saying is, P2P helps smaller independent artists and is detrimental to large "manufactured" pop acts. Which is pretty much common sense, and is why the corporate music industry is so against it.
The argument that "lack of investment" will produce a shortage of talent is clearly ridiculous. How many of the great, truly talented acts we all know and love were the product of "investment" by the music industry? And how many struggled in poverty for years because they loved making music, before finally being signed up by a label and exploited for all they were worth...?
What this means is that being a musician will no longer be a multi-million dollar a year job. It will be a job that pays only thousands of dollars a year, the same thing "the rest of us" get paid. And it also means that more people will be able to be musicians, as opposed to now where being a musician for a living is very difficult. I'll definitely take many musicians making many songs and each making enough money to pay rent over a few musicians making a few songs and making enough to pay everyone's rent. Ask yourself which of these two makes a better society.
The GeekNights podcast is going strong. Listen!
I particularly like the Fairshare proposal floated by Ian Goldberg, in which you could "invest" in promising new artists. It gives incentive to get in on the ground floor with a little-known artist, rather than to ride the coattails of a megastar.
Any alternative would be better than the current system.
I think the industry's biggest problem is a lack of diversity. Right now, everything on mainstream radio sounds exactly the same. Even ten years ago, radio was still crap, but at least you could differentiate the music better. Personally, I rarely even listen to the radio at all anymore, and when I do, it's a classic rock station.
Record companies want to go with what's "safe" these days. No one wants to take a risk on signing and promoting an artist that's "different." However, the big rewards come with big risk. I really wish these huge, billionaire conglomerates like WEA and SonyBMG would gamble a little bit more. They're actually losing a lot of good acts who are moving to smaller labels like Koch and Sanctuary. Audium (a Koch label) has become one of the best labels in country music by signing artists who got cut by the majors, like Dwight Yoakam, Merle Haggard, and Dale Watson. Sanctuary is now home to the likes of Iron Maiden and Morrissey, two of England's best sellers ever, who still are putting out good albums. It just kills me how labels will not settle for "just" platinum anymore. You have to go multi-platinum to be a success now. I remember how Capitol was getting disappointed with Garth Brooks when his albums started selling "only" two million copies. This is the same Garth Brooks who single-handedly saved Capitol/EMI from bankruptcy with No Fences and Ropin' the Wind, each of which sold something like over 10 million two consecutive years. He had the top 3 albums in the U.S. for over a year. But if he's only two-times platinum and not ten-times platinum, then he's no good to Capitol! This is the kind of moronic thinking that drives the recording industry. It is pure, unadulterated greed. So much greed that it completely clouds any sensibility they might have.
A few points here :
1. True, filesharing might reduce the incentive to invest in new acts. But it definately reduces the need. If you don't need millions of dollars to launch your album, just a laptop and a podcasting site, then who needs investment? I think what will happen is that the promotional aspects of the music biz will survive in a substantially reduced form (after all, people still need to hear about you!) but the whole production and distribution megalith will go the way of the 8-track.
2. I agree, though, that P2P itself means next to nothing to a small unknown artist. Nobody is going to type your name into Limewire if they have never heard of you, obviously. Internet radio and podcasting are muhc more meaningful and useful tools for such artists. You get a podcaster to listen to your music, they play it for people, those peopel go to your website, etc.
3. It's said a lot, but it bears repeating : even Britney Spears makes only pennies per CD. The big name artists make all their money on touring. So there's no reason to worry about the ten cents you might be 'stealing' from Britney if you download a song. If you love her and want to support her, go to her concerts, buy her clothes, her perfumes, whatever. She gets a lot more money out of that.
Essentially, the music industry has reacheed the point where it is almost completely parisitical in nature. And like any parasite, it wants to control its host, and fears the light of day. Right now, they exploit the fact that the people and most importantly the legislators don't really grasp the issue at all. When you say to someone "Should they be allowed to steal our music?" and they know nothing of what is truly going on, it's hard to blame them for saying "Gee, I guess not!"
But we don't have to worry about that. This revolution requires no propaganda on our side. With every MP3 player, every iPod, every DVD player sold, our view sells itself. Eventually the RIAA and its bloodsucking ilk will be reduced to the level of rambling lunatic old men defending their collections of old cans and newspapers with bloodthirsty vehemence, oblivious to the fact that nobody wants them any more.
Michael J. Bertrand, AKA Fruvous or FruFox My