| Author
|
Pro file sharing research in NYTimes
|
droozi
IsraTrance Junior Member
Started Topics :
33
Posts :
402
Posted : Apr 5, 2004 16:42
|
A Heretical View of File Sharing
By JOHN SCHWARTZ
Published: April 5, 2004
The music industry says it repeatedly, with passion and conviction: downloading hurts sales.
That statement is at the heart of the war on file sharing, both of music and movies, and underpins lawsuits against thousands of music fans, as well as legislation approved last week by a House Judiciary subcommittee that would create federal penalties for using what is known as peer-to-peer technology to download copyrighted works. It is also part of the reason that the Justice Department introduced an intellectual-property task force last week that plans to step up criminal prosecutions of copyright infringers.
But what if the industry is wrong, and file sharing is not hurting record sales?
It might seem counterintuitive, but that is the conclusion reached by two economists who released a draft last week of the first study that makes a rigorous economic comparison of directly observed activity on file-sharing networks and music buying.
"Downloads have an effect on sales which is statistically indistinguishable from zero, despite rather precise estimates," write its authors, Felix Oberholzer-Gee of the Harvard Business School and Koleman S. Strumpf of the University of North Carolina at Chapel Hill.
The industry has reacted with the kind of flustered consternation that the White House might display if Richard A. Clarke showed up at a Rose Garden tea party. Last week, the Recording Industry Association of America sent out three versions of a six-page response to the study.
The problem with the industry view, Professors Oberholzer-Gee and Strumpf say, is that it is not supported by solid evidence. Previous studies have failed because they tend to depend on surveys, and the authors contend that surveys of illegal activity are not trustworthy. "Those who agree to have their Internet behavior discussed or monitored are unlikely to be representative of all Internet users," the authors wrote.
Instead, they analyzed the direct data of music downloaders over a 17-week period in the fall of 2002, and compared that activity with actual music purchases during that time. Using complex mathematical formulas, they determined that spikes in downloading had almost no discernible effect on sales. Even under their worst-case example, "it would take 5,000 downloads to reduce the sales of an album by one copy," they wrote. "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.
"While downloads occur on a vast scale, most users are likely individuals who would not have bought the album even in the absence of file sharing," the professors wrote.
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.
The most popular albums bought are also the most popular downloads, so the researchers looked for anomalous rises in downloading activity that they might compare to sales activity. They found one such spike, Professor Oberholzer-Gee said, during a German school holiday that occurred during the time they studied. Germany is second to the United States in making files available for downloading, supplying about 15 percent of online music files, he said. During the vacation, students who were home with time on their hands flooded the Internet with new files, which in turn spurred new downloading activity. The researchers then looked for any possible impact in the subsequent weeks on sales of CD's.
Professor Oberholzer said that he had expected to find that downloading resulted in some harm to the industry, and was startled when he first ran the numbers in the spring of 2003. "I called Koleman and said, 'Something is not quite right - there seems to be no effect between file sharing and sales.' "
Amy Weiss, an industry spokeswoman, expressed incredulity at what she deemed an "incomprehensible" study, and she ridiculed the notion that a relatively small sample of downloads could shed light on the universe of activity.
The industry response, titled "Downloading Hurts Sales," concludes: "If file sharing has no negative impact on the purchasing patterns of the top selling records, how do you account for the fact that, according to SoundScan, the decrease of Top 10 selling albums in each of the last four years is: 2000, 60 million units; 2001, 40 million units; 2002, 34 million units; 2003, 33 million units?"
Critics of the industry's stance have long suggested that other factors might be contributing to the drop in sales, including a slow economy, fewer new releases and a consolidation of radio networks that has resulted in less variety on the airwaves. Some market experts have also suggested that record sales in the 1990's might have been abnormally high as people bought CD's to replace their vinyl record collections.
"The single-bullet theory employed by the R.I.A.A. has always been considered by anyone with even a modicum of economic knowledge to be pretty ambitious as spin," said Joe Fleischer, the head of sales and marketing for BigChampagne, a company that tracks music downloads and is used by some record companies to measure the popularity of songs for marketing purposes.
The industry response stresses that the new study has not gone through the process of peer review. But the response cites refuting statistics and analysis, much of it prepared by market research consultants, that also have not gone through peer review.
One consultant, Russ Crupnick, vice president of the NPD Group, called the report "absolutely astounding." Asked to explain how the professors' analysis might be mistaken, he said he was still trying to understand the complex document: "I am not the level of mathematician that the professors purport to be."
Stan Liebowitz of the University of Texas at Dallas, author of an essay cited by the industry, said the use of a German holiday to judge American behavior was strained. Professor Liebowitz argued in a paper in 2002 that file sharing did not affect music sales, but said he had since changed his mind.
The Liebowitz essay appeared in an economics journal edited by Gary D. Libecap, a professor of economics at the University of Arizona, who said that his publication was not peer reviewed, though the articles in it were often based on peer-reviewed work. Professor Libecap said he attended a presentation by Professor Strumpf last week, and said the file-sharing study "looks really good to me."
"This was really careful, empirical work," Professor Libecap said.
The author of another report recommended by the industry said that the two sets of data used by the researchers should not be compared. "They can't get to that using the two sets of data they are using - they aren't tracking individual behavior," said Jayne Charneski, formerly of Edison Media Research, who prepared a report last June that she said showed that 7 percent of the marketplace consists of people who download music and do not buy it. That number is far lower than the authors of the new study estimated. "There's a lot of research out there that's conducted with an agenda in mind," said Ms. Charneski, now the head of research for the record label EMI
|
|
|
Henry
Started Topics :
4
Posts :
85
Posted : Apr 5, 2004 16:55
|
that last comment,' "There's a lot of research out there that's conducted with an agenda in mind," said Ms. Charneski, now the head of research for the record label EMI' , seems a bit ironic don't you think.
|
|
|
|
tom anteater
IsraTrance Full Member
Started Topics :
56
Posts :
1637
Posted : Apr 5, 2004 17:09
|
@ henry : hahahaha.. quite   >>love will tear us apart...<< |
|
|
|
nobody_3
Inactive User
Started Topics :
13
Posts :
1177
Posted : Apr 5, 2004 17:17
|
To me it seem a bit ironic that people actually think that 5000 downloads wont do any harm and that it will increase sales.... there's no logic in the research....
I dont buy their results... sorry
|
|
|
|
ChoBo
IsraTrance Junior Member
Started Topics :
50
Posts :
536
Posted : Apr 5, 2004 17:29
|
I think too much has been said about downloading these days. In South East Asia, where I am, the problem lies elsewhere. Here you have pirated CDs which does more damage to the industry. I am very happy that I havent seen any psytrance album in these VCD shops in my country. These shops sell mostly commercial dance stuffs. Be it, your Ministry of Sound compils, mixes etc. Here its mostly those club trance, hardhouse, pop and etc. Overseas, there is a huger variety. An album can be bought for $US 2 or even less!. You can even get it for $1 in other countries in my region. Piracy is the biggest issues here. I can DVD's for $US 3-4 bucks. Over here it isnt that bad, if you look say at Malaysia, Thailand, its even worse. You have vendors selling your latest commecial compils on the streets. This accounts for millions of copies and it is occuring everyday. I dont know how much money that amounts to. Police keeps busting these shops and vendors but the selling continues. I am just glad i have not seen any pirated copies of psytrance albums as of yet, i hope it doesnt happen. It will hurt the community more.
I dont really agree with these research on music download on the effect of sales. First of all, it is not representative. Secondly, it is too damn hard to research, too many variables. Thirdly, much of the data is statistical, it just gives you a simplified view but never the real picture of what is actually going on. |
|
|
|
droozi
IsraTrance Junior Member
Started Topics :
33
Posts :
402
Posted : Apr 5, 2004 17:31
|
|
@Elysium - I guess what they are saying is that the ones that are downloading are the ones that would not buy in the first case - if there wasnt any downloading - so thats why sales are not hurt - cause these are the ones that would not buy to start with. So in other words it may end up helping sales in the long run - since it will get more and more people into the habit of listening to music they posses and so eventually they too will be converted into people that do buy. I hope this makes sense. |
|
|
|
nobody_3
Inactive User
Started Topics :
13
Posts :
1177
Posted : Apr 5, 2004 17:45
|
Yes it makes sense if you believe in those old excuses. I just dont buy those excuses.
I see it differently. Those who download are mostly the ones that would have gone to the record shop and bought the music if they couldn't get the music for free. They are the ones that love music passionately but wont support the artists.
Take parents that buy music for their kids (children music has never sold better than now). They actually go to the shops (or internetshops) and buy the CD's. You dont see them downloading mp3's 
The mp3 downloading is mainly (whitout forgetting older people too) done by young people that rather use their money on cellphones and SMS's, DVD's, clothes and drugs. And as long as they have free music at their fingertips they'll never go and buy it.
I haven't seen any valid evidence whatsoever that your suggestion is correct. But it's an excuse I see all the time from people that download music (I dont say your one of them).
|
|
|
|
Surrender
IsraTrance Team
Started Topics :
506
Posts :
5388
Posted : Apr 5, 2004 17:55
|
good article droozi, saw it myself but never thought about going online and posting it... im so slow sometimes...
"On the other hand, you have different fingers."
http://myspace.com/gadimon |
|
|
|
Stash
IsraTrance Full Member
Started Topics :
58
Posts :
1261
Posted : Apr 5, 2004 18:24
|
well according to me this research is done taking into consideration other genres of music
they mustnot have researched on the psy trance scene where million records dont sell of each album!!!!
hence this wont hold true for the psy trance scene
coz it doesnot have big label names in it as compared to labels in the Pop/rock/ and all that other crap who can sustain drop in cd sales
psy labels on the other hand are relatively poorer and hence if they dont sell the go out of business and have to shut shop
so MP3 do hurt!!!!!!!!!!! IMO
love & light
bOm shiva!!!!!!! 
At the end there is a DOOR & waiting for you on the other side of that door is either HEAVEN or HELL |
|
|
|
tmel
Started Topics :
0
Posts :
6
Posted : Apr 6, 2004 02:31
|
Quote:
|
On 2004-04-05 17:45, Elysium Project wrote:
Those who download are mostly the ones that would have gone to the record shop and bought the music if they couldn't get the music for free. They are the ones that love music passionately but wont support the artists.
|
|
I see a controversy here. People who really love music would not settle for mp3:s because of their inferior sound quality.
In the past I bought no cd:s at all, but when I discovered psytrance (and it's subgenres etc..) my attitude towards music changed completely. Ever since I have spent lots of money on a better audio system and original cds. Not mainly because I want to support the artist but because I love the music so much that I want to hear it like it's meant to be heard.
I won't go guessing about the effects of mp3 on cd sales generally, but in my case it does no harm. All the albums I have bought I have also downloaded beforehand to see how I like them. |
|
|
|
Rik
IsraTrance Team
Started Topics :
107
Posts :
966
Posted : Apr 6, 2004 11:13
|
Quote:
|
On 2004-04-05 17:17, Elysium Project wrote:
To me it seem a bit ironic that people actually think that 5000 downloads wont do any harm and that it will increase sales.... there's no logic in the research....
I dont buy their results... sorry
|
|
I just finished reading trough the full report by harvard university ( well over 50 pages PDF file on their website) and i must say it seems they did a pretty good job. the best i read so far on the subject.
www.psytracks.com :: Brand new website for sharing your psytracks with the world. Get a free 250Mb Artist profile, Blog and events calender!
www.psygarden.be :: Upload your psychedelic art and partypictures to our gallery! |
|
|
|
tom anteater
IsraTrance Full Member
Started Topics :
56
Posts :
1637
Posted : Apr 6, 2004 12:50
|
can someone give me a link to the actual paper, i want to have a look at it...
by paper i don;t mean the nytimes.. i mean the research paper.. thanks
>>love will tear us apart...<< |
|
|
|
Rik
IsraTrance Team
Started Topics :
107
Posts :
966
Posted : Apr 6, 2004 13:10
|
Quote:
|
On 2004-04-06 12:50, tom anteater wrote:
can someone give me a link to the actual paper, i want to have a look at it...
by paper i don;t mean the nytimes.. i mean the research paper.. thanks
|
|
I have the pdf on my desktop, i'll email it to you if you wish, just send me a message with your email adress (364kb pdf file)
www.psytracks.com :: Brand new website for sharing your psytracks with the world. Get a free 250Mb Artist profile, Blog and events calender!
www.psygarden.be :: Upload your psychedelic art and partypictures to our gallery! |
|
|
|
|
