P2P file sharing boosts music sales
p2pnet news | Music:- Dear me.
Awful news for Vivendi Universal (France), Sony BMG (Japan and Germany), EMI (Britain), and Warner Music (US).
A major new Canadian federal government study has finally and irrevocably demolished their claims that file sharing is wreaking havoc with sales and, in the process, throwing thousands of helpless support workers onto the streets.
Among other things, “downloading the equivalent of approximately one CD increases [our emphasis] purchasing by about half of a CD,” says the study, from Industry Canada.
It’s the first on P2P file-sharing which analyzes, “original and representative microeconomic survey data from the Canadian population”.
Also, “We find evidence that purchases of other forms of entertainment such as cinema and concert tickets, and video games tend to increase with music purchases,” say its authors, University of London researchers Birgitte Andersen and Marion Frenz.
Files shared equal sales lost
For the past few years, the worlds of the Big 4 have been slowly but inexorably tumbling around their ears.
Their credibility hangs in tatters, they’re haemorrhaging customers like there’s no tomorrow and, because they failed utterly to identify P2P as their saviour, instead casting it as The Devil, they’ve completely failed to capitalise on the new wave of music which has captivated millions of online music lovers, with billions waiting in the wings.
Warner Music, EMI, Vivendi Universal and Sony BMG have spent an enormous fortune which, rightfully, should have gone to shareholders, trying to make the world believe they’re being “devastated” by people who share music with each other online.
Through the likes of their RIAA (Recording Industry Association of America), the Big 4 try to say:
- Files shared equal sales lost
- Sharing a file is exactly the same as thievery, even though nothing has been stolen, no money has changed hands and no one has been deprived of anything they used to own
- That there’s no difference between sharing and walking into a retail store and stealing a CD.
With that kind of sophistry as justification, in the US, people such as Jammie Thomas are vilified and humiliated as a matter of routine. And Big 4 lobbyists are making headway with Canada’s government to introduce changes in legislation which would allow their paymasters to be able to do the same in Canada.
Meanwhile, a significant number of academic and other equally credible studies, such as what’s possibly the most famous, The Effect of File Sharing on Record Sales: An Empirical Analysis, have put the lie to the claim that filesharing is causing irreparable damage to the beleaguered (so they say) multi-billion-dollar corporate record companies.
But although the mainstream media are always willing to devote gallons of ink and billions of bytes to inaccurate disinformation put out by the Big 4, somehow, they’re not willing to do the same for materials which cast doubt on the labels’ disingenuous statements.
Now comes the Industry Canada, study which states, unequivocally, that P2P file-sharing, “tends to increase rather than decrease music purchasing”
Says the abstract:
The primary objective of this paper is to determine how the downloading of music files through Internet peer-to-peer (P2P) networks influences music purchasing in Canada. P2P networks permit members to transfer digitally-stored information to one another over the Internet; popular examples include BearShare, LimeWire and eMule. Using representative survey data from the Canadian population collected by Decima Research on behalf of Industry Canada, we attempt to quantify this economic relationship, while accounting for other factors that influence music purchasing. We undertake a variety of econometric estimations for the population of Canadians who engage in P2P file-sharing (P2P “downloaders”), as well as for the whole Canadian population. To our knowledge, this is the first study on P2P file-sharing that analyzes original and representative microeconomic survey data from the Canadian population. Few previous studies have analyzed representative microeconomic data, for Canada or any other country.
The existing literature identifies two competing effects associated with the P2P music file-sharing: the sampling and substitution effects. The sampling effect is characterized both by individuals downloading music in order to listen to it before buying it as well as by individuals downloading music that is not available in stores, while the substitution effect is characterized by individuals downloading music instead of purchasing it. In this paper, we further disentangle the sampling effect by adding a market segmentation effect, characterized by individuals engaging in P2P file-sharing because they do not want to purchase the entire bundle of songs on a CD.
Our review of existing econometric studies suggests that P2P file-sharing tends to decrease music purchasing. However, we find the opposite, namely that P2P file-sharing tends to increase rather than decrease music purchasing.
Among Canadians who engage in P2P file-sharing, our results suggest that for every 12 P2P downloaded songs, music purchases increase by 0.44 CDs. That is, downloading the equivalent of approximately one CD increases purchasing by about half of a CD. We are unable to find evidence of any relationship between P2P file-sharing and purchases of electronically-delivered music tracks (e.g., songs from iTunes). With respect to the other effects, roughly half of all P2P tracks were downloaded because individuals wanted to hear songs before buying them or because they wanted to avoid purchasing the whole bundle of songs on the associated CDs and roughly one quarter were downloaded because they were not available for purchase. Our results indicate that only the effect capturing songs downloaded because they were not available for purchase influenced music purchasing, a 1 percent increase in such downloads being associated with nearly a 4 percent increase in CD purchases.
We find evidence that purchases of other forms of entertainment such as cinema and concert tickets, and video games tend to increase with music purchases. It has been argued in the literature that the increase in the number of entertainment substitutes has led to a decline in music purchasing, but our results do not support this hypothesis. As expected, we find that reported interest in music is very strongly associated with music purchases. Finally, our results suggest that household income is not important in explaining music purchases.
Says Jack Kapica in the Globe & Mail:
Industry Canada, a ministry of the federal government, has released a surprising study of peer-to-peer file-sharing on the music industry.
The study is called The Impact of Music Downloads and P2P File-Sharing on the Purchase of Music: A Study for Industry Canada, and was written by Birgitte Andersen and Marion Frenz, of the Department of Management at the University of London in England.
Its conclusion: P2P file-sharing does not put downward pressure on purchasing music, as the music industry has insisted for years. In fact, it does just the opposite: It tends to increase music purchasing.
What?
This is, after all, a study released with the blessings of the federal government, not some self-serving poll commissioned by the music industry.
And this is from the same federal government that has indicated it wants to upset the balance that is so necessary to good copyright law to fall in line with what music and Tellywood industry lobbyists want.
The study said that in Canada, for every 12 P2P downloaded songs, music purchases increased by 0.44 CDs.
That means, the study’s authors say, “downloading the equivalent of approximately one CD increases purchasing by about half of a CD.”
Moreover, Industry Canada said it was “unable to find evidence of any relationship between P2P file sharing and purchases of electronically delivered music tracks [such as iTunes].”
The study concluded that about half of all P2P tracks were downloaded because individuals wanted to hear songs before buying them or because they wanted to avoid purchasing the whole bundle of songs on the associated CDs. Another quarter were downloaded because they were just not available in music stores.
The study said that the effect of a 1 per cent increase of downloading songs that were not available in stores was associated with nearly a 4 per cent increase in CD purchases, which suggests that people are really interested in buying CDs that the recording industry is not interested in promoting.
Needless to say, industry lobbyists will dismiss the study immediately; they have invested far took much time, money and effort mounting an intense campaign against the effect of the Internet on their businesses.
But this would not be the way to fight Industry Canada’s study. To answer Industry Canada, the Canadian Recording Industry Association would have to do two things: It would have to come clean about the formula it uses to calculate the damage allegedly being done to its business by file-sharing, and it would have to come up with a manifestly independent study of its own, and release the entire thing to the public.
And I don’t mean its study to be some quickie job done by the research arm of CRIA’s public-relations company, which has produced several “studies” that have supported everything the industry claims.
There is another interesting issue here. Since the study was created with heavy input from Industry Canada (though there is a disclaimer in it that says the study’s conclusions are not necessarily shared by the federal government), the government will be put in an interesting position should it cave into industry demands and craft a new copyright law that throws the entire copyright system out of balance, in favour of big business.
Or perhaps the government can use the study as a reason to balance proposed legislation.
This will be interesting.
It will indeed.
That grinding sound you hear is Graham Henderson gnashing his teeth in helpless fury.
He’s the front man for the Big 4’s CRIA (Canadian Recording Industry Association of America), the Canadian RIAA clone.
Definitely stay tuned.
Jon newton – p2pnet
Also See:
Industry Canada – The Impact of Music Downloads and P2P File-Sharing: Abstract, November 2, 2007
vilified and humiliated – My Story, November 2, 2007
most famous – Freakonomics of Music, September 21, 2007
Globe & Mail – File-sharing is good for Big Music November 2, 2007
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November 3rd, 2007 at 12:09 pm
This is what some of us have known for a long time, its good to actualy have some “evidence” on it other then common sence.. :p cheers
November 3rd, 2007 at 12:25 pm
Harper will now have some heavy explaining to do
How could have let this happen? hehehe
November 4th, 2007 at 11:41 am
The cria/riaa/ETC will probability find something to argue about or they will ignore the study!
one angle of attack could be that P2P users ARE strong media consumers where as lesser consumers are the ones changing because riaa BS!