Net music piracy 'does not harm record sales'

This just in from the New Scientist

Internet music piracy is not responsible for declining CD sales, claim the researchers behind a major new statistical study. Felix Oberholzer-Gee at Harvard Business School in Massachusetts and Koleman Strumpf at the University of North Carolina tracked millions of music files downloaded through the OpenNap file-trading network and compared them with CD sales of the same music. ... the researchers conclude: "At most, file sharing can explain a tiny fraction of this decline."

Oberholzer-Gee and Strumpf monitored 680 albums, chosen from a range of musical genres, downloaded over 17 weeks in the second half of 2002. ... The most heavily downloaded songs showed no decrease in CD sales as a result of increasing downloads. In fact, albums that sold more than 600,000 copies during this period appeared to sell better when downloaded more heavily. For these albums each increase of 150 downloads corresponded to another legitimate album sale. The study showed only a slight decline in sales as a result of online trading for the least popular music.

The Recording Industry Association of America (RIAA), which represents the world's largest record companies, point to a number of studies suggesting a between declining record sales and the growth of illegal file-trading.
For example, a series of surveys conducted by Houston-based company Voter Consumer Research have indicated that those who download more songs illegally are less likely to buy music from legitimate retailers.
"Countless well respected groups and analysts have all determined that illegal file sharing has adversely impacted the sales of CDs," says RIAA spokeswoman Amy Weiss. But at least one other survey has already suggested precisely the opposite. And the new UNC study differs from previous work in its focus on individual album sales and its large scale. During the data gathering stage, the researchers tracked a total of 1.75 million downloads, or 10 per minute on average.

The music business can scream all it likes, but there are some things that it wont discuss, and they are the key to all this.

1. The downturn in music sales occurred at the same time as downloading music from the net took off, therefore, the downloading caused the fall. Logic 101. Post hoc ergo propter hoc is a fallacy. While there may be a link, there is no necessary link. Other factors such as the attractions of the net generally may have withdrawn existing clients' support from the music industry in any case, along with better, faster game machines etc. There may also have been a backed-up demand for more interesting things to do than listen to, and buy, crap music. As soon as they appeared, the music was history.
2. The industry assumes that every person downloading music would have been forced to buy the music if they couldn't download it. But the net has changed the whole econimics of information distribution. In doing so, people who had bought their connection for any number of other purposes, suddenly were able to use the tools to download music, potentially increasing manyfold the number of people interested in listening but now operating in an environment where there is no fee. To imagine that these downloaders were originally regular music buyers who had completely stopped doing so is hallucinatory. Which brings us to the big lie;
3. every downloaded file is not just a potentially lost sale, but an actually lost sale. The music business is claiming that every single person who downloads a file is doing so instead of buying a copy, and therefore the downloaded file represents 1 for 1, lost sales. That is absurd on its face because the reduction in sales is not even within an order of magnitude of the number of files swapped, shared, downloaded or in any other way obtained from the net.

By focusing on those aspect, and calling every instance of the total difference between sales and downloads an act of theft, piracy or breach of copyright, the industry has managed to create a very large number and the US justice system, along with others, is very impressed by very large numbers, even when they are patently bogus.

Hence the current insanity. Its upsetting when someone actually investigates the facts, but them's the breaks and at least the net is living up to one of its adverts, everything about it is knowable.

Comments

[Rob Ruffo]

Yes, the Music Industry exagerates piracy figures, but to say that there is no connection bewteen the decimation fo the music industry and Napster and other P2P services that followed is frankly ludicrous.

Kids still listen to music, they just pay $0 for it. In the case of many consumers, maybe not every download would have been a sale, that's true, but every sale is now instead a download, and rarely a legal one.

I hope your own work is stolen (all of it) and that you receive $0 for your work, and that then someone comes out and writes an article like this describing how you have no right to legal recourse.

[Earl Mardle]

Go for it Rob,

Hope is how the music industry has dealt with the problem so far and it ain't a strategy.

Here's the news. I KNOW people cfan steal my stuff and not pay me. I put it here for people to take and do with what they want.

The music "industry" has been a brief, passing shower in the history of human creation that allowed a small group of people to steal the creative work of a lot of artists.

Do you imagine for a moment that most of the people with music contracts make any money out of it? The music company gets the first, the biggest and in most cases, all of the rights and profits from their work.

Thomas Chippendale designed and made chairs. He also published books of those designs so that other people could make them as well. He charged for the books, but anyone could make and sell a Chippendale chair for only their own effort.

Well, plainly, HE had no future.

[Rob Ruffo]

Well, that's your choice, as it should be anyone's choice, to do as you please with what YOU own. That's how Western democracies are supposed to work.

Just because the RIAA may be using less than perfect methods to communicate their defense of copyright law doesn't mean that the copyright law should not be defended.

Fine, the record industry needed reform, but decimating all its profits is obviously not the way to help artists get a more fair share of the profits.

The erosion of copyright law is the erosion of the financial value of ideas.

If we want the film industry to continue, or the book industry, or even the biotech industry, we need copyright laws to be enforced.

I for one do not think that someone with a handi-cam and no training can make a film in his or her spare time as compelling as Blood Diamond or even as compelling as Die Hard. For proof, see YouTube. A few cheao laughs does not replace the hours and hours and weeks and weeks of hard work it take to produce deep insights into the human condition, hours which must be paid for.

[Earl Mardle]

Rob, the fallacy in your point is this, "If we want the film industry to continue, or the book industry, or even the biotech industry, we need copyright laws to be enforced."

1. The industry is part of the problem. It has consistently attempted, and succeeded in extending the copyrights far beyond their original intention of supporting the actual creator to providing cheap profits for the "industry" for its lifetime, effectively forever. Imagine the brothers Grimm's estate having permanent control over their stories. How would Disney ever have got where it is? But suggest for a moment that Disney's stories can, and should, be mined, extended and mashed for the future and you will get dumped on.

2. With such unreasonable extensions of copyright, the only way to release the cultural artefacts back into the stream is by breaking the law, tough, when the law is an ass, sooner or later the common wisdom will become that it should be broken or ignored. The net just provides the tools for that to happen on a scale that the "industry" cannot defeat.

3. The "industry" does its damnedest to make sure that it captures all but the tiniest sliver of the profits from any creator it takes under contract. To posit that the "industry" is a fair, reasonable or efficient way to ensure that creators get paid for their works is BS. Artists under contract (except for the very biggest ones) are effectively slaves.

4. Yes, the biotech industry is expensive and needs to be paid for, but a great deal of the vital research and development work is already done in publicly funded institutions and public access to its benefits should be part of the deal, and again, the biotech business has to cope with losing its patents after a remarkably few short years, while the creative industries get to hang on for generations. If biotech can accept generic drugs after 25 years, how come the movie business can't?

5. The model you defend is perfect for a particular time and place and technological suite, but all of those have changed now and the model doesn't apply. As people like Larry Lessig and Tim O'Reilly and Cory Doctorow and others are showing, trying to lock away your IP in a networked world is not just a waste of time and effort, it is financially dumb.

Will fewer books be printed and fewer discs be sold, yep. So what? The medium is NOT the message and when you only need to buy the message, the infrastructure needed to support the delivery mechanism will decay. Certainly any "industry" based on the medium is doing that as we speak.

None of that will change one iota of the creativity occurring; what it will change is the number of parasites on that creativity and right now, the media, the publishers and the music companies are the parasites, not those who download some tracks without paying for them.

Oh, and as for youTube being the "alternative" to big budget productions, nope. But that's the problem, the focus is not on the creativity and the story telling, its on the budget, and with good reason, because THAT is what the industry is interested in and the creators (screenwriters strikes anyone?) are grist to the mill.

The point at issue is not whether someone can make a living from their IP, the point is appropriate reward for that creativity.

In a world where we are free to buy or have for free, we will actually pay for the things we appreciate, but only after we have experienced them, just as my boss pays me for the work I do AFTER I have done it.