Lost sales vs p2p file sharing
p2pnet.net News:- Does a p2p download equal a lost sale?
It’s a simple question. And the simple answer is, No! Not even nearly.
Think about it for more than 10 seconds, and you’ll see that’s the obvious conclusion.
And yet most members of the mainstream media are having a lot of trouble grasping that, just as they’re having difficulty understanding that it’s unwise to accept information emenating from the entertainment industry as though it comes from a credible source.
However, the tide seems to be turning, if only a little.
Writing in the New York Times, Daniel Gross says record industry executives. “hold it as an article of faith that the advent of file-sharing Web sites like Napster and Kazaa was largely responsible for a stunning decline in the sales of recorded music. From 1999 to 2003, after all, the number of compact discs and other forms of recorded music shipped in the United States plunged 31 percent.”
Other factors such as “the stubbornly high price of CD’s, a recession that cut into discretionary spending, a plethora of unappealing pop acts and the intense competition for the entertainment dollar” have have had something to do with it but, “there’s no question that file sharing has an enormous impact on sales,” RIAA (Recording Industry Association of America) spin-master-in-chief Mitch Bainwol is quoted as saying.
However, “academics have begun to plug data about free downloading into complex equations and theoretical frameworks,” says Gross.
Professors Joel Waldfogel and Rafael Rob at Penn University measured the downloading and CD-buying behavior of students at the University of Pennsylvania, Hunter College in New York and City College of New York, he says, and, “In a working paper published recently by the National Bureau of Economic Research, they concluded that students each spent $126 on the best-selling CD’s without downloading and $101 with downloading.
“While conceding that their research didn’t cover a representative sample, they concluded that every 10 downloads of music resulted in 1 to 2 lost sales.”
Felix Oberholzer-Gee of the Harvard Business School who, with Koleman S. Strumpf of the University of North Carolina at Chapel Hill go even further.
Even under their worst-case example, ‘it would take 5,000 downloads to reduce the sales of an album by one copy,’ they say in their milestone The Effect of File Sharing on Record Sales.
And, “After annualizing, this would imply a yearly sales loss of two million albums, which is virtually rounding error’ given that 803 million records were sold in 2002. Sales dropped by 139 million albums from 2000 to 2002.”
[..] sales of recorded music rose earlier this year,” says Gross, adding:
“In the first half of 2004, shipments of CD’s rose 10.2 percent from the period the previous year, according to the recording industry group. ‘In that context, there’s a tourniquet around the problem,’ said Mr. Bainwol. He said the industry’s crackdown on file sharing was bearing some fruit.”
But even this statement is decried by academic studies.
“In general we observe that P2P activity has not diminished,” states an important US Academic study. “On the contrary,” it goes on, “P2P traffic represents a significant amount of Internet traffic and is likely to continue to grow in the future RIAA behavior notwithstanding.”
The report, Is P2P dying or just hiding?, was prepared by by CAIDA ( Cooperative Association for Internet Data Analysis), SDSC (San Diego Supercomputer Center) and the University of California at San Diego and Riverside.
“The risk tied to Internet file-sharing is almost zero despite entertainment industry claims to the contrary,” says Dr Markus Giesler’s Rethinking Consumer Risk: Cultural Risk, Collective Risk and the Social Construction of Risk Reduction.
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See:-
article of faith - Does a Free Download Equal a Lost Sale?, New York Times, November 21, 2004
not diminished – P2p file sharing is thriving, p2pnet, October 27, 2004
almost zero – RIAA law suits are failing, p2pnet, November 3, 2004
November 23rd, 2004 at 12:19 pm
The RIAA appears to think that each downloaded track is a lost sale. In reality this is far from the truth. Most people would not buy the tracks if they could not be downloaded. Tracks are either downloaded as a trial and are later purchsed on CD or are judged as not worth buying anyway.