Does File-Sharing Really Hurt the Music Biz?

Phonographic Memory writes "A new study has come out that purports to show a link between file-sharing and decreased CD purchases. Covering the period of 1995-2003, the study looked for a link between owning a computer and decreased CD purchases. The researcher found that 'some US music consumers could have decreased their CD purchases (prior to 2004) by about 13 percent due to Internet file sharing.' In its coverage of the study, Ars Technica notes that the scholarly consensus on the possibility of a link between file sharing and music purchases is missing: 'the dominant impression gained from reading these studies is that finding accurate correlations between file-sharing and loss of revenue for the music industry is tremendously difficult.'"

Comments

Percent Confidence & Uncontrolled Variables

[eldavojohn]

Aside from this being just a generally difficult type of study to execute, but what is their confidence level that a 13% drop is related to file-sharing?

Though the methodology is complex, the results are straightforward: some US music consumers "could have decreased their CD purchases (prior to 2004) by about 13 percent due to Internet file sharing."

Oh, there it is, the word 'could.' So on a level from one to a hundred, where does 'could' lie? I mean, if this was a rigorous statistical procedure -- no matter how complex, they should be able to give a percent confidence. You can measure deviation from your model and give it to me that way but I'm concerned that there might have been uncontrolled variables affecting the sale of CDs.

And I believe that iTunes Music Service has been out since 2001, is that accounted for? It doesn't seem to be if you search the below linked document. I mean, I assume this study is targeting illegal downloads. iTunes is legal to my knowledge yet it would still decrease CD purchases.

If you'd like to read the paper, it can be found here (PDF alert).

While this study does take into acocunt some variables, I'm just afraid there are too many for it to be conclusive. I would recommend that the article ignore Family Size and find out how many of their users used a legal music download service.

Also, is 2,000 samples per year enough to be accurate? Possibly, but then again, they are talking about an economy of 250 million consumers.

Actually, File Sharing HELPED the music business

[queenb**ch]

Here's a few little goodies that the RIAA forgot to include with their pet study...

1. Nicholls State University is in Thibodaux, Louisana which isn't exactly a hotbed of business research
2. His study doesn't state where the funding to conduct the study was obtained from.
3. The data came from the Consume Expenditure Survey, which is notoriously inaccurate
4. RIAA has cut back on advertising and promotion for music across the board
5. Their sales were actually better while Napster was in operation, without any additional expenditure on their part.

Just my 2 cents,

QueenB

Re:Perhaps it is a demographics shift too

[Dargoth_Rejuv]

http://www.pandora.com/ is the one I use, but I'm sure there are others out there. I still keep up with a few bands that release an album every couple of years, but by no means am I buying a CD every weekend, so my habits personally would probably be part of the 'file sharing is bad argh!' statistic, rather unjustly imo.

Re:Perhaps it is a demographics shift too

[JadeAuto]

Last.fm is another one of the demographics music websites. Very nice, i've used it for a year and a half now. It's turned me on to music in other lands that I quite enjoy.

RIAA FAQ point-by-point

[ajs]

Frequently Asked Questions About Illegal File Sharing

This is so good it just had to be answered... heh.

Is illegal file sharing really such a problem?

For the past four years, sales and shipments of recorded music have been plummeting--and the downward trend shows no sign of abating. (Unit shipments have fallen 26%, from 1.16 billion units in 1999 to 860 million units last year, while revenues are off by 14%, from $14.6 billion in 1999 to $12.6 billion last year.). At the same time, sales of blank CD-R disks (the kind you copy music onto) have been soaring, and that dovetailed with the widespread use of file-sharing. So, yes, it really is a problem.

A friend of mine calls this "lying with your teeth in your face." I call it stupid. First off, the RIAA members are public corporations, and the big boys are all growing. In fact, they have been growing for quite some time. You have public records to demonstrate this on any finance site you want to visit. What's changing is the business model. Now, in specific, that "unit shipments have fallen" figure fails to account for online sales and other alternate media formats. This is just bad statistics.

Who says that sharing music through peer-to-peer networks is illegal?

Federal law and a string of court decisions. Federal copyright statutes (specifically, Sections 501 and 506 of Title 17 of the United States Code) and the "No Electronic Theft" (NET) Act provide penalties for the unauthorized reproduction, distribution, rental or digital transmission of copyrighted sound recordings. Moreover, an unbroken series of court decisions--most recently, in Metro-Goldwyn-Mayer Studios, Inc., et al. v. Grokster, Ltd., et al., and in RIAA v. Verizon Internet Services Inc.--has affirmed that "sharing" copyrighted music files over peer-to-peer networks without the copyright holder's permission constitutes "direct infringement."

Which clearly demonstrates that music sharing is not illegal. Sharing copyrighted music to which you do not have a valid license or ownership of the copyright is illegal. This is a fine point that the RIAA would appreciate if you simply forgot.

Didn't the courts just rule that peer-to-peer networks are perfectly legal?

In the Grokster case, a district court did rule that the Grokster and StreamCast networks couldn't necessarily be held liable for the illegal activities of their users. That ruling is now being considered by a Court of Appeals. In any case, the court also made it abundantly clear that whether or not a network itself can be held responsible, the users of that network can clearly be guilty of copyright infringement.

In other words, you are responsible for your own actions. Yes, thank you. Now would you please stop trying to sue ISPs, dead people and little kids?

Aren't most downloaders merely sampling music that they later wind up buying?

If this were true, music sales would be soaring, given the astronomical increases in peer-to-peer file sharing. Music consumption has never been higher, but unfortunately, an increasing segment of the population is stealing instead of paying for it.

Music sales are soaring. There, that was easy.

Isn't the real problem that consumers don't like the music you're putting out?

If people don't like today's music, why are they illegally downloading literally billions of new songs each month?

Wouldn't people buy more CDs if they didn't cost so much?

If you're going to compare the price of CDs to that of stolen music--which is free--of course they're going to seem expensive. But if you take inflation into account, music CDs are actually cheaper today than they were 20 years ago. (In 1983, when CDs were first i

Correlation != Causation

[Fonkey]

Just because variable A (e.g. owning a computer) and variable B (e.g. buying less music) occur together does NOT mean that either one necessarily caused the other. This study proves nothing useful, regardless of its validity. Even if you could show that people who actually download music tend to pay for it less, you still have not proved that downloading harms music sales. This is because correlational studies (such as the one FTA) do not rule out additional variables (e.g. socioeconomic status).

previous papers from Dr. Michel ...

[sun5diver]

Just FYI, Dr. Michel's written on similar subjects before:

http://www.heritage.org/Research/Regulation/wm609. cfm - Hollywood, Values, and P2P Lawsuits by James L. Gattuso and Norbert J. Michel, Ph.D.
November 11, 2004 (WebMemo #609.) - MPAA's filesharing lawsuits are a sensible alternative to regulating technology.

http://www.heritage.org/Research/InternetandTechno logy/bg1790.cfmInternet - File Sharing: The Evidence So Far and What It Means for the Future by Norbert J. Michel, Ph.D. August 23, 2004 (Backgrounder #1790.) - Internet file sharing threatens artists' ability to sell their music through digital downloading because the digital files available from artists are virtually indistinguishable from those.

http://new.heritage.org/Research/InternetandTechno logy/EM835.cfm - Self-Defense: A Different Tune on Copyright by James L. Gattuso and Norbert J. Michel, September 25, 2002 (Executive Memorandum #835) - in defense of Representative Howard Berman's radically different approach to solve the digital copyright violation problem: allowing copyright owners to use digital self-help measures to ...