03/30/2004: 
Fraud & Conspiracy
Empirical data on file-sharing's effect on album sales
found at BoingBoing
Koleman Strumpf, a conservative, Cato-affiliated economist at the University of North Carolina at Chapel Hill, has just co-authored a paper on the effects of file-sharing on album sales, based on the first-ever empirical data analysis in the field. Koleman watched the file requests on OpenNap servers (to get numbers on which albums' tracks are being downloaded) and compared them to the sales-figures for each album, correlating file-sharing popularity against sales data. His conclusion: file-sharing isn't killing record sales.
We analyze a large file sharing dataset which includes 0.01% of the world's downloads from the last third of 2002. We focus on users located in the U.S. Their audio downloads are matched to the album they were released on, for which we have concurrent U.S. weekly sales data. This allows us to consider the relationship between downloads and sales. To establish causality, we instrument for downloads using technical features related to file sharing (such as network congestion or song length) and international school holidays, both of which are plausibly exogenous to sales. We are able to obtain relatively precise estimates because the data contain over ten thousand album-weeks...
Even in the most pessimistic specification, five thousand downloads are needed to displace a single album sale...high selling albums actually benefit from file sharing.
Finally, some empirical evidence that the RIAA is full of shit. Contrary to the figures stated by the RIAA, file sharing is not detrimental to music sales but is in fact beneficial. Will the RIAA still cling to their dying business model despite the mounting evidence and popular opinion, or will they smarten up and embrace a paradigm that could potentially make them more money then they could make by continuing to rip off artists and suing old ladies?
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Tuesday the 30th of March, prof_booty noted:
there's been a surge in legal downloads from my website. i think i will release my next album under the Creative Commons license.
Tuesday the 30th of March, Sydney Morning Herald noted:
The Australian Recording Industry Association (ARIA) has put out a press release showing that album sales reached 50 million for 2003, and 65 million when singles sales are included; both are record numbers. This fact, buried within a press release entitled "Music DVD continues its rise whilst CD singles slide further," casts doubt on industry claims that they are losing CD sales as peer-to-peer file trading networks allow pirates to download songs for free. Finance reporter Peter Martin examined ARIA numbers to track the discrepancy between statistics and headline, and found that while album sales increased 7.85%, singles sales dropped 16.5%. The music industry makes its profits primarily from album sales; in the United States, singles, primarily a promotional tool, have almost disappeared from sale. The author asserts that the ARIA is trying to divert attention to bolster its legal arguments.
