Rus | Eng
Allofmp3.ru
Raw version of service
Blogs.Allofmp3.ru  - mp3 music reviews
Change preferences
blogs.allofmp3.ru / Journals / M / music_news / Study: file sharing has zero effect on music sales /

music_news 91 posts

Unbiased Digest about Music Industry

9 votes

20 February 2007, 22:45

Study: file sharing has zero effect on music sales

While falling CD sales is a fact, the reasons for the decline remain unclear. A recent study by Felix Oberholzer-Gee and Koleman Strumpf published in the Journal of Political Economy contradicts the music industry srory that file sharing has had drastic effect on CD sales. Whereas organizations like RIAA and IFPI fail to explain how their alarming figures are calculated, the study explains in detail “whether file sharing has reduced the legal sales of music”.

The conclusion of the researchers is that it hasn’t. “Downloads have an effect on sales that is statistically indistinguishable from zero. Our estimates are inconsistent with claims that file sharing is the primary reason for the decline in music sales during our study period.”

This study entitled "The Effect of File Sharing on Record Sales: An Empirical Analysis" spans the last quarter of 2002 and analyzes “the logs of two OpenNAP P2P servers with sales data from Nielsen SoundScan, tracking the effects of 1.75 million songs downloads on 680 different albums sold during that same period.” (Ars Technica).

The data shows that "file sharing has had no statistically significant effect on purchases of the average album in our sample… Even our most negative point estimate implies that a one-standard-deviation increase in file sharing reduces an album's weekly sales by a mere 368 copies, an effect that is too small to be statistically distinguishable from zero."

“Individuals can use file sharing to sample music, which will increase or decrease sales depending on whether users like what they hear…File sharing lowers the price of music, which draws in low-valuation individuals who would otherwise not have purchased albums.”

So file sharing has “both sales displacement and learning effects, and it is unclear if either effect dominates… the impact from file sharing could not have been more than 6 million albums total in 2002, leaving 74 million unsold CDs without an excuse for sitting on shelves.”

As to the real reasons for the decline, it might be that the stores have been reducing their stock. Also the DVD sales grew during that period, so it might be that people’s preferences shifted to buying DVDs rather than CDs.


Read more:
The Effect of File Sharing on Record Sales: An Empirical Analysis, Journal of Political Economy

Entry tags: CD sales 13, market statistics 11, P2P 6, file-sharing 12

Comments 43

1. by thundercloud, 21 February 2007, 01:07

Has the industry ever considered that the decline is directly related to the type of crappy music that they are getting behind? Perhaps studies would show that songs like Fergie's "Fergalicious" and Gwen Stefani's "Wind It Up" are killing more brain cells than most drugs on the streets.

2. by Nightfly, 21 February 2007, 02:22

Independents are also getting there share and hopefully taking away some from the big boys..There is a great deal of excellent music being put out by indepents in all genres..Check out EMUSIC about 25 cents a download and offers everything That is not on a major label...but God
Bless ALLOFMP3 that offers us great music,great service at great prices.
The record industry will eventually die when we will be able to download
inserts at a reasonable price...isn't that sometime why you buy a cd
because of the packaging and the notes..If a site would come up with that concept..they would control it all.

3. by smurf32, 21 February 2007, 04:41

The basic assumption of the people from the RIAA is that every song that has been downloaded through P2P would otherwise have been bought if there was no P2P. This is of course completely wrong. People mostly download stuff because they can, not because they really like the music. If I really like an album, I'll still buy it if I can (i.e. if I can find it for a non-ridiculous price and without stupid copy protection crap), just to have something better than the low-quality junk mostly found on P2P networks.

4. by Noname, 21 February 2007, 09:13

Here’s the score: File sharing 2, RIAA 0

Read more here!

http://madmadmedia.blogspot.com/2007/02/file-sharing-wins-again.html

5. by music_news, 21 February 2007, 16:33

Just saw it on BBC yesterday, Warner made an offer to buy EMI... again.

6. by raiderx, 21 February 2007, 21:36

The cost of in-store CD's are (and always have been) too high! The industry must realize this. I am a musician myself and record everything at home with computer software and hardware. Recording doesn't have to costs tons of money for artists anymore, so they can't use that excuse why the average CD costs $16.99 $18.99 USD. It's CRAP! Downloading is just cheaper and more convenient.

7. by burmie, 23 February 2007, 03:25

Yeah, maybe P2P services do put a strain on Record labels - To make better music for a cheaper price. But accomplishing that is really not that hard. They just cant let go of their 12 mansions and million dollar sport cars.

Oh yeah, thundercloud, how bout that song that goes "this is why i'm hot, i am cuz im fly" then explains in great detail by saying how your not: "you aint cuz your not".
is that not a quality song????

bullsh!t.

i think they think we are fools. Well, people are fools. But public opinion is drastically changing.

8. by Visa Scrobbler, 23 February 2007, 04:31

I'd like to thank VISA for cutting off currency conversions so I can no longer purchase music here :( Every time a child gets killed accidentally in Iraq, I get a pudding cup. Thanks America for all your delicious puddings.

9. by Victor, 23 February 2007, 05:21

The RIAA calculations are just silly and stupid. Do they really think they would be selling all those millions, billions, thrillions of songs people are downloading? I would have never bought the hundreds of albums I have downloaded thanks to P2P so that is not money they have lost. There are two reasons why I would have never bought them. Firstly and mainly because I haven't got the money. But also because in many cases I download music just to discover new things, to experiment, to open my mind to other sounds. I wouldn't obviously do it if I had to pay for it. On the other hand, I have ended up buying albums by artists I first discovered while downloading. The truth is, in my own experience, that I have bought more music since P2P exists because I am now able to know music I would have never known if it hadn't been that way. The more music I know, the more music I like, the more concerts I go to, the mor music I buy. They should think about it.

10. by Paul Doherty, 23 February 2007, 14:26

I've read all the comments about this and I agree with everything. To put things in perspective when I was growing up in the 70's along came the cassette recorder and guess what? The music industry wrung their hands and said "Woe is us". Everyone will copy the records. Well it didn't happen and here we are 30 years later and it's the same old mantra. The fact is that as long as record companies continue to go for the 'fast fix, quick buck' release with no long term investment
in the artist they will ultimately fail and that's why sales are falling. The standard of music today, with some exceptions, is very poor and is short-changing us. No other industry, worldwide, ignores the benefit of investment in the way the music industry now does. The music companies ARE the artists!! So we now have the MP3. The so called nemesis of the music industry, which was created by the music industry. Ironic, Eh? I have downloaded songs using P2P and consequently bought many albums.
In fact I would estimate my spend on music has probably quadrupled as a direct result of the ability to download and try it. Thirty second , poor quality samples are not enough to get a handle on a song.

That's my rant over with.
Thanks for reading.......

11. by minotaur1967, 23 February 2007, 17:06

Thunderclouds remarks are brilliantly Eloquent. Well said. Totally agree.
At least some drugs do enhance minds unlike a lot of crap these music companies regurgitate ;)

Am soooo thankful we have www.allofmp3.com .... best best best...

12. by alpha, 23 February 2007, 19:17

Reasons for decrease of the CD sales are obvious:

1) Our home shelves are overflowed with hundred of CD, reaching the saturation point
2) People now prefer DVD that offer images in addition to sound for the same price
3) Internet and supermarkets now offer widely the possibility to hear before the purchase making it foolish to buy an entire CD that contains only one or two good songs by 10 garbage songs.

Otherwise said, P2P has offered solutions for points 1 and 3, that means P2P has prospered on music industry deficiencies but not against them. P2P exists because of the great lack of intelligence of music industry. P2P is the result, not the cause, and these two studies prove it.

13. by a giant business mistake, 23 February 2007, 22:45

It is a classic business case of holding on to the old methodology, and missing the opportunity. The industry is fixated on per-unit pricing, rather than per-user spending.

Studies have shown that decreases in pricing increase unit purchases vastly, such that the resultant total revenue goes way up. Basic elasticity of demand. Since incremental production costs are close to zero, almost all of that increased revenue turns into margin.

I would not be surprised to see a drop in unit price to about US $0.15 per song translate into sales dollars increasing 50- or 100-fold. They, and we, and the artists, would then all be much better off. It will become normal to have 1,000+ albums in one's collection.

If they continue to fight it, ultimately they will be bypassed by all the mainstream artists, and the recording industry will have killed itself. This genie will never be put back into the bottle; right now, almost any pc can rip normal CD's into mp3, and burn 50+ albums on a single blank DVD, for about US$0.25. These can be disbributed amongst friends and reletives, etc., with no downloading.

The recording industry can either get on the train and make more money than they used to (by being able to give consumers much more value for the buck spent), or they can be left at the station and rationalize it by feeling victimized. Myopic.

14. by a giant business mistake, 23 February 2007, 22:51

And yes, you can compete with free. Bottled water has demonstrated that quite dramatically. Good quality download service at 15 cents per song (with good id3 tags, etc), easy searching, flexible file-naming, reliable file finding, etc., will be worth paying something for by most people that have ever spent much time and hassle trying to find and clean-up free stuff. Yes, some folks will continue to not pay for it. But some always will anyway, and if sales go through the roof, it won't much matter.

15. by Atlanta, GA, 24 February 2007, 00:26

Personally, I find downloading from allofmp3.com or P2P networks and perfect way to "stick it to the man". Corporate America is so disgustingly corrupt I'm all for anything and everything that lowers their profits and disrupts their business. Hooray for allofmp3.com and any P2P networks that allow people to withhold their money from the pockets of these corporate maggots.

16. by music_news, 24 February 2007, 02:06

To "giant business mistake": how about making you commentary a separate post? You have a point and we'd like to put it at the Journals main page for further discussion.
Thanks,
AllofMP3

17. by truth, 25 February 2007, 07:46

I would say I download a lot of music. But who uses p2p anyways anymore. All you get on those is crap. I agree that I listen to a lot more music because a free downloading. I do it because I'm cheap and don't want to pay $20 bucks for a shitty cd sometimes.

18. by giant business mistake, 25 February 2007, 20:26

I would be glad to make it a separate post. I have gone to the Journals main page, but I don't see any method to post something there. I have a slightly enhanced version of the post available.

19. by Art, 25 February 2007, 20:40

I have a theory that many of the reasons why radio and the rest of the industry, is failing because they are not releasing enough new music to satisfy demand. They are also not releasing enough QUALITY music. I also believe Clear Channel (aka Radio Monopoly) is killing the industry.

Do the research and look at the charts from 80's. New music was introduced at rate of at least 1 new song a month, many times it 2 or 3.The playlists and charts changed accordingly from month to month, week to week, we had true number one hits. When Clear Channel took over, the landscape drastically changed. As indicated that if you look at the charts today. A new song is relased about once every six weeks, and charts hardly ever move. We get a situation where the same songs, almost in the same order, are played for almost a year (and yes this happening here in Texas, in a larger city) with at least 8 spins a day of the more popular songs.

I finally found a none Clear Channel hip hop/rap station, they actually more variety within the format, and introduce more new music.

20. by mike_delewey, 26 February 2007, 11:37

What I don't understand is they allow the technology to be developed to enable us to copy movies off cable, tape records, copy CD's etc. etc, and then get upset when we use that technology for the purpose for which it was built. I personally think these 'artists' get paid too much for the crap they put out, and why should I suppplement the cost of the hotel rooms they trash, and the coke they put up their noses.

21. by music_news, 27 February 2007, 00:20

to giant business mistake: if you log in and go to the Journals page you should be able to see the "write post" link in the top right corner of the screen.
Regards,
music_news

22. by music_news, 27 February 2007, 00:24

to Art: same offer. Care to make your comment a separate post, so that it can appear in the Journals section?

music_news

23. by joem, 1 March 2007, 00:28

visa and mastercard wont allow honest costumers to buy cheap music tracks online,but they allow there cards to be used for sickos downloading all sorts od sick porn. come on get your priorities right go for the real culprits here.

24. by Anonymous, 1 March 2007, 03:14

But Hey, The big corporations do it all in the name of profits which in turn satisfy shareholders which in turn generates more profit.(This Has Been Happening in the past 5 years with most corporations(thankfully not Google))

25. by victoria, 1 March 2007, 09:23

The big problem with the music industry (besides churning out a lot of bad music) is the disappearance of the cd single, of which they are entirely to blame. Think about it. Their entire model is based around the hit single. An artist can create a great album but the music industry has shaped the business so much around the hit single that if said artist doesn't have that snappy, over processed single on their album the label won't allow them to release it.

The music industry has shot itself in the foot by doing away with the cd/45/cassette single after building the hit single business model. Wanting to gouge consumers out of more money they rarely make singles that you can buy anymore. Instead you have to buy the entire album even if you only like one or two songs on the album. Most people are hip to this and so they choose to download what they like (legally or not) and leave the rest. It hasn't stopped people from buying music but it has made people more selective about what they choose to buy on cd. The days of being forced to buy a cd full of filler songs with only one or two good songs on it are over. Consumers have spoken with their dollars. Too bad the music industry still doesn't get it.

26. by Phil, 1 March 2007, 09:32

Personally I don't give a damn about their bottom line. Nor do I care to purchase crappy, fabricated, lossy, copy-protected, overpriced, regurgitated, controlled and limited junk which won't even play on my PC, or if it does, will infect it. So I have no choice but to download free music. As it is the music industry is rabidly trying to ruin that as well, by closing down services and polluting the networks like the whores and pimps they are.

Nor can I use this service, as I have no way to pay, and never did have credit cards.

27. by Chris, 3 March 2007, 02:24

It all comes down to..

'Would I buy something in the shops if I didn't download it?'

The answer, for the most part, is no. Most of my downloads (not file sharing by the way) are based on friends recommendations. I would not pay shop prices for something which I may not like. Anything which I know I will enjoy (bands who are proven/not first albums) I will buy in the shops.

28. by Michelle, 6 March 2007, 04:38

Anyone who supports music piracy either through posting sensational news that it doesn't effect music sales or any other lame "natural-justice" arguement has to remember that in the end, piracy HURTS THE ARTISTS. When real artists cant live off of their music, what's left IS the glossy-watery-industry-pop puppets that will still manage to eek out a living while truely innovative singers and songwriters will be doing their best to work in their freetime after their 10 hour day in the office.

29. by baker, 9 March 2007, 23:24

Michelle,

The claims made in this article are no more "sensational" than those made by the RIAA and the like claiming that every download represents a lost sale.

30. by Harry S. Baggs, 10 March 2007, 02:49

Michele, does it hurt teh artists or are you just parroting the RIAA stance. When teh RIAA went after napster they asked Robbie Williams to join in their holy crusade to stop these illegal downloaders that are killing our industry. His response? So what, let them download it and enjopy my music, I make my money from concerts and merchandising.

Metallica did assist the RIAA, where are they now? Has the RIAA come to their aid in getting their fan base back to wheere it was before they greedily supported the RIAA?

Bands like the Beasty Boys have embraced the electronic music front and made it easier for their fans to get teh music they want and not the music the labels force feed the consumers.

Thundercloud is totally correct, the dross that the latte sipping, jaguar driving wimps in the music industry like is waht is really killing it.

31. by David Geffen, 11 March 2007, 15:04

As far as I'm aware, rapper Akon's career has skyrocketed over the last 2-3 years. A period shorter than the existence of file sharing. According to "Smack that" he drives a Lambourghini Gallardo. Doesn't sound like CD sales are bothering him much.

32. by Fej Zitnells, 12 March 2007, 08:07

Does anyone remember "Rock Video Monthly"? That particular format exposed my friends and I to a ton of good music we wouldn't have ever heard otherwise. The videos on those VCR tapes were directly responsible for the purchase of many of the CD's in my collection. I always thought of p2p in the same way. My friends did too. If any of us want music from a band we're already familiar with we just go buy it. If it's someone we've only heard of, we USED TO download a few songs to check the artist out. If it flew we bought. If it sank we didn't. Now we just don't buy. So the unavailability of p2p files (for us at least) has led to a net decrease in the number of CD's we all buy. Why is the recording industry so lame??

33. by nathan, 13 March 2007, 20:19

all i have to say, is i can not stand the riaa or the mpaa. I want them both to die so they have to get real jobs. I can't express how much i hate them.

34. by Abou Ali, 15 March 2007, 03:26

In my lifetime ,I have bought entire discographies... I have paid tousands of dollars over the years to the RIAA (and no i don't drive around in a jaguar)
Before downloading p2p i used to record some songs off the radio on an audio tape. They spoke of us like theifs back then because we wanted to see if a song would still have the same effect on us after a few spins before buying the album or the single. They still speak of us as theves today.
The funny thing is that none of my best music comes from any company affiliated with the RIAA but most of it comes from small labels. You know why? i' ll tell you why. it's because they (small independent labels) don' t make a business out of music. they release the artist's work as HE sees fit.

35. by mecormany, 15 March 2007, 16:27

The RIAA still doesn’t realize they lost the day Napster went online. They still don’t realize Fanning presented them with the greatest publicity tool in the history of selling entertainment and for six years now they’ve reacted as if he dropped a cobra on their laps. I bought more cds listening to napster than I ever had in my life – and the answer is very simple to all of us, but they still don’t understand – I was able to hear more music than ever before in my life. Bands from around the world I was aware of and may have heard a sample cut but that wasn’t enough to make me buy the CD, but hearing half a dozen cuts was. As many have mentioned, their war is not about protecting the poor starving artists, the record companies have ripped off artists, especially those of color, since Edison said “Mary Had A Little Lamb”; they’ve ripped off the consumer for years, most notably by the outrageous prices for CDs of previously released albums where they didn’t have to do a damn thing but repackage it – half the time not even cutting it from the originals. You had to wait several years to get great sounding copies of some classic albums by talented artists.

The RIAA is all about the RIAA and the scores of upper management and middle management who are scared to death they should have to work for a living. But it’s done everything in its power to alienate the music buying public with their asinine assumption that if 100 people download some crap song, which is the only way they’d ever bother obtaining a copy, they’ve lost 100 sales. Even if they did, who are they to be paid every single time a song changes hand? I’ve had five novels published, nice advances but only fair sales like most mid-list trash. And where did a lion share of those sales go – libraries. At a reduced library rate (read – royalties to author about 2 cents). The head librarian in my hometown told me once that my 5 books had checked out like 15.000 times over an 8 or 10-year period – it never entered my head that meant 15.000 lost sales. But it did mean many readers who otherwise never would have bought or read any of my work, and a few of them may have picked up a subsequent paperback or two. Like with CDs, people can’t afford to spend 25 bucks on a book they’ll read once. Maybe. Likewise, the RIAA can’t figure out the CD – LP – any type of multi-track piece of music is in its death throes, they’ll still be made just out of habit but the days of millions upon millions of sales and wasting a hundred grand on an album party are over. Nobody has ever been happy paying for 4 good songs on a 15-song album or CD. There are a few classics of course, but they are way outnumbered by the 2 hit songs, 8 mediocre at best originals, 2 usually horrendous covers and – hey. Lets’ let the drummer sing one for laughs --type of cuts. Happily, we’ve all found allofmp3 who are showing the RIAA what the future is, but of course, they’re going to bat a thousand and ignore it. A good site with a great selection (the only other one that ranks with them is e-music) with no DRM crap – you buy it, you own it (again, e-music is the only other one I know of that sells music without restrictions.)

And to Michelle I say, ma’am you are well intentioned, but you believe the wrong people. The RIAA ripped off those same artists who they claim to be fighting for. Where did the Rolling Stones find Muddy Waters when they were in Chicago for the first time – painting the lobby of Chess Studios. A founder of rock, recognized as a giant of blues throughout Europe, yet after 20 years of having hit records, he had to paint houses to supplement his income. Ask Jeff Tweedy and Wilco about creative bookkeeping that the studios use when they pay artists. They made 2 albums with Billy Bragg and what was their royalty check? Less than $10.00. (That’s ten dollars). Artists unless they are the Stones or Elton John and get a big check up front, do not make money off the cds and LPs – they make it touring. If they write the songs they may lose some money but as you should be able to figure out reading these comments, most songs downloaded here and anywhere else are songs that are nice to have but I wouldn’t have gone out and bought a cd to get them; or it’s a relatively new act and I’m deciding whether to by it or not. Many artists like Chucky D and Prince realized from the start what a bonanza this was and embraced p2p sharing - -others, Metallica and Dre come to mind – like the RIAA had their head stuck in the past and ignored what was happening. If every p2p music outlet or allofmp3 type of business (what a concept, good quality music at a realistic price – everybody’s happy, right? Not the RIAA.) -- if every one of those was shut down tighter than a drum tomorrow, Next quarter the RIAA would have to come up with a new reason – eventually they might even get around to putting the blame where it belongs – pushing limited talent artists on the public and not giving the public much of a chance to complain. Another reason I know their arguments about artists are bogus – I love World Beat and bands like Tinnariwen and Natacha Atlas and others. Ever heard of anybody with a computer full of rai, soukous, bhangra, Batacha, tropical or Pacific Rim music busted? They don’t care about artists, Michelle, they care about the artists who are making them the big bucks right now. Next year, it’s someone else. It’s all about them. Never been about the artists, never been about the music fan.

The future is now and it’s been happening since the Millennium. RIAA, you can sue your college kids and widows and children and pick up a few thousand, but in the process you’ve killed half your market, gotten a reputation that’s somewhere between the Gestapo and Big Brother, worst of all you’ve been so busy crying and suing, you had your back turned while the future of selling music zipped past you. You are a dying organization. And it couldn’t happen to a more deserving bunch of dinosaurs. Enjoy the Lamborghini’s, yachts and Armani suits while you still own them. But keep them in good shape, you may need to liquidate them someday.

Thanks, all of mp3 –Christ, what more do we want? Good music, great prices, and they give us a forum to have our say against the RIAA who I assume peruses this more than occasionally. RIAA, you’re too stupid to be allowed to control anything, especially something as important as music. As a proud pirate who feels wronged by the industry, not one who has wronged the industry, let me be the first to say “Buh-bye.”

Mike

36. by Elaine, 17 March 2007, 12:11

Well Nektar,I'm in the same boat as Baker, the only option is JCB. I'm looking at the screens right now and I can't select anything but that payment option. I have sent off emails to ChronoPay & AllOfMP3.com to find other options. This really sucks!!!

37. by Michelle, 19 March 2007, 23:33

Mike, baker etc.. I appreciate your thoughtful comments and I agree with some of them actually.. I am an electronic music producer and vocalist (as well as a law student) and all of my work is done in electronic form. I see the internet and technology as being a curse and a blessing.

It's a blessing because techy types like myself find the internet empowering to distribute their music and connect with fans worldwide. Its frustrating because I don't make any money from my music (I will work as a lawyer after school and squeeze in music on the side), yet I'm finding my music showing up on pirated sites and these people who had nothing to do with the creation of the work WHAT-SO-EVER are making money off it. Now thats the real irony!

I understand that copies of songs are just one small part of the "artist" if you will and I'd like to get into doing live shows but right now I don't have time to do that between school and recording/songwriting. Do all artists have to be career artists/starving artists in order to make it? Why can't laws be enforced so recording artists like myself can eek out some sustenance? I love songwriting, and a lot of people like my stuff. I just wish that society would support me so that I can do my life's passion full time instead of giving fans second-rate work because I am too busy to focus on my art.

My overall take on it is that artists will have to develop a creative solution on the issue of piracy/meeting fans demand for music in a reasonable fashion. I'm certainly willing to negotiate directly with the fans to please them and be the entertainer they want sans representation from industry goons. Any ideas??

38. by music_news, 20 March 2007, 04:11

to Michelle: could you turn you comment into a separate post? So that it can be featured in our Journals section?
BR,
AllofMP3

39. by ENKpWjxcQRs, 19 May 2008, 12:10

hI6GyK

40. by closetworld, 4 June 2008, 06:14

Thanks so much Closet World Our Closet dialect birth b deliver physician was out within 48 hours, and we settled on the best form for my old lady’s closet
closetworld.com

41. by closetworld, 4 June 2008, 07:00

Thanks so much Closet World Our Closet dialect birth b deliver specialist was out within 48 hours, and we settled on the excellent form for my the missis’s closet
closet world

42. by closetworld, 10 June 2008, 11:40

Thanks so much Closet World Our Closet elated physician was out within 48 hours, and we settled on the excellent form for my the missis’s closet
closet world

43. by Alan, 24 July 2008, 02:46

This interesting..

Your name:

Your Comment:

Calendar

2006

September 1, October 9, November 11, December 8

2007

January 6, February 7, March 8, April 6, May 10, June 4, July 2, August 10, September 3, October 3, November 1

2008

May 2
© 2000-2007, Mediaservices, Inc.