March 30, 2004

File-Sharing No Threat to Music Sales

In a study released today, two respected Economists (Felix Oberholzer-Gee of Harvard Business School and Koleman Strumpf of the University of North Carolina) found that, at most, file-sharing resulted in one lost CD sale for every 5,000 songs downloaded. By their "most pessimistic statistical model", file-sharing resulted in a decline of sales of two million CDs in 2002 whereas the total decline was 139 million CDs from 2000 to 2002. This means that the RIAA's claim that file-sharing is the primary or even a significant negative influence on their business is utterly false. Another interesting thing that the researchers found was that "file sharing actually increases CD sales for hot albums that sell more than 600,000 copies. For every 150 downloads of a song from those albums, sales increase by a copy..." I sincerely hope that this study puts to rest the 'file-sharing = stealing' equation that some have been quick to throw around on CH. Stealing implies taking something of positive value from someone without their permission. If file-sharing actually results in positive value being transferred to the author and not away from him then any comparison with common shoplifting is misguided.

Posted by dr_v at March 30, 2004 09:26 AM

Word, homie!

Posted by: kristina on March 31, 2004 12:34 PM

Preach on, brotha man!

Posted by: clint on April 1, 2004 04:45 PM

The New York Times chimes in:

"In an interview, Professor Oberholzer-Gee said that previous research assumed that every download could be thought of as a lost sale. In fact, he said, most downloaders were drawn to free music and were unlikely to spend $18 on a CD.

"'Say I offer you a free flight to Florida,' he asks. 'How likely is it that you will go to Florida? It is very likely, because the price is free.' If there were no free ticket, that trip to Florida would be much less likely, he said. Similarly, free music might draw all kinds of people, but 'it doesn't mean that these people would buy CD's at $18,' he said."

Posted by: sean on April 5, 2004 03:13 PM