p2pnet - rss feed: New twist on CD sales
p2pnet.net News:- With The Effect of File Sharing on Record Sales ringing in its ears, the music industry now has another report to think about, and one that states, among other things, “There must be something about Internet access, other than income, that correlates with CD purchasing. Perhaps it’s filesharing; perhaps it’s something else; or perhaps it’s a combination of both”.
It’s from Eric Boorstin, a senior at Princeton who, writes professor Edward W. Felten on Freedom to Tinker here, has just filed his senior thesis, Music Sales in the Age of File Sharing.
“The thesis includes a clever study of the impact of Internet usage on CD sales,” says Felten. “This is a twist on previous studies, which have tried to correlate CD sales to usage of filesharing. The tradeoff here is that although Internet usage is one step removed from filesharing, the data on Internet usage are much more detailed and much more reliable than the data on filesharing usage.
“Eric worked from two datasets. The first dataset came from SoundScan, and gave him aggregate sales of CDs, on a week-by-week basis, for many separate metropolitan areas in the U.S. The second dataset came from the U.S. Census Bureau, and contained data on population, income, and Internet usage, broken down by age group and geographic area. The census data came from 1998, 2000, and 2001. Combining these datasets, he ended up with data for CD sales, age group demographics, income, and Internet adoption, at three different points in time, in ninety-nine separate metropolitan areas in the U.S.
“Eric took these datasets and did a regression to determine the correlation between Internet adoption rate and CD sales, broken down by age group. He controlled for differences in personal income. (For more methodological details, see the thesis.)
“For people in the 15-24 age group, he found a significant negative correlation between Internet adoption and CD sales. For people in all of the age groups older than 25, he found the opposite ? a significant positive correlation between Internet adoption and CD sales. Overall, the correlation was significantly positive ? metro areas with higher rates of Internet adoption had significantly higher CD sales.
“The explanation cannot be that higher income predicts both Internet adoption and CD sales; remember that Eric controlled for differences in income. There must be something about Internet access, other than income, that correlates with CD purchasing. Perhaps it’s filesharing; perhaps it’s something else; or perhaps it’s a combination of both. Overall, each additional Internet user in a metro area correlated with 3.5 additional CDs sold.
“There are two caveats to bear in mind in thinking about this study. First, what the study found was correlation, not necessarily causation ? it may be that some common factor is causing both Internet usage and CD purchasing. Second, the study measures marginal effects, not average effects. We cannot conclude that every Internet user in a metro area contributes an extra 3.5 CD sales; we can say only that adding one more Internet user would increase sales by that much.
“What does it all mean? And how does this connect to previous studies on filesharing? For my answers to those questions, tune in Monday, when I’ll unveil my Grand Unified Theory of Filesharing.”
[We asked Felten for a hint, at least, but he refused to to comment further : ) So tune in Monday - Ed]
