In other recording industry news, it turns out that the Australian Recording Industry has been deliberately trying to conceal the fact that it's had its best year ever. Gee, I wonder why.c|net wrote:Music sharing doesn't kill CD sales, study says
By John Borland
Staff Writer, CNET News.com
A study of file-sharing's effects on music sales says online music trading appears to have had little part in the recent slide in CD sales.
For the study, released Monday, researchers at Harvard University and the University of North Carolina tracked music downloads over 17 weeks in 2002, matching data on file transfers with actual market performance of the songs and albums being downloaded. Even high levels of file-swapping seemed to translate into an effect on album sales that was "statistically indistinguishable from zero," they wrote.
"We find that file sharing has only had a limited effect on record sales," the study's authors wrote. "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 study, the most detailed economic modeling survey to use data obtained directly from file-sharing networks, is sure to rekindle debates over the effects of widely used software such as Kazaa or Morpheus on an ailing record business.
Big record labels have seen their sales slide precipitously in the past several years, and have blamed the falling revenue in large part on rampant free music downloads online. Others have pointed to additional factors, such as lower household spending during the recession, and increased competition from other entertainment forms such as DVDs and video games, each of which have grown over the same time period.
Executives at file-sharing companies welcomed the survey, saying it should help persuade reluctant record company executives to use peer-to-peer networks as distribution channels for music
"We welcome sound research into the developing peer-to-peer industry, and this study appears to have covered some interesting ground," said Nikki Hemming, chief executive officer of Kazaa parent Sharman Networks. "Consider the possibilities if the record industry actually cooperated with companies like us instead of fighting."
The study, performed by Harvard Business School associate professor Felix Oberholzer and University of North Carolina, Chapel Hill associate professor Koleman Strumpf, used logs from two OpenNap servers in late 2002 to observe about 1.75 million downloads over their 17 week sample period.
That sample revealed interesting behavioral, as well as economic, data. Researchers found that the average user logged in only twice during that period, downloading about 17 songs. Some people vastly overshot that average, however--one user apparently logged in 71 times, downloading more than 5,000 songs.
The two professors narrowed their sample base by choosing a random sample of 500 albums from the sales charts of various music genres, and then compared the sales of these albums to the number of associated downloads.
Even in the most pessimistic version of their model, they found that it would take about 5,000 downloads to displace sales of just one physical CD, the authors wrote. Despite the huge scale of downloading worldwide, that would be only a tiny contribution to the overall slide in album sales over the past several years, they said.
Moreover, their data seemed to show that downloads could even have a slight positive effect on the sales of the top albums, the researchers said.
The study is unlikely to be the last word on the issue. Previous studies have been released showing that file sharing had both positive and negative effects on music sales.
The Recording Industry Association of America was quick to dismiss the results as inconsistent with earlier findings.
"Countless well-respected groups and analysts, including Edison Research, Forrester, and the University of Texas, among others, have all determined that illegal file sharing has adversely impacted the sales of CDs," RIAA spokeswoman Amy Weiss said in a statement. "Our own surveys show that those who are downloading more are buying less."
Apparently, the UK's industry is enjoying similar success.smh.co.au wrote:Music industry way off track with song and dance about falling sales
Figures show that we're buying albums in record numbers, despite the internet 'freeloaders', writes Steve Cannane.
The Australian record industry has just had its best year ever. But it doesn't want you to know about it. This month ARIA announced its sales figures for last year. In its press release, it talked about Delta, it talked about falling CD singles sales, it talked about the rise in DVD sales, but at no stage did it tell us it was the industry's best year ever. Why bury the good news?
Record industry types aren't usually shy about success. But this time their success is a little embarrassing. For the past few years the industry has argued that file-sharing and CD burning is having a negative impact on sales. But, unfortunately, their own sales figures don't back up their arguments.
ARIA's press release was slugged with a bizarre headline: "Music DVD continues its rise whilst CD singles slide further". A mixed year, you might think. Not so. It took a canny finance reporter, SBS's Peter Martin, to decode the spin. He had access to ARIA sales figures going back to the early 1980s. He worked out what ARIA knew but decided not to share: when sales cracked 50 million albums for the year it was the first time this had happened. And combined sales of all formats for last year climbed to more than 65 million for the first time.
But that's just one year, I hear the record companies say. OK, let's go back to 1998. The year before an 18-year-old college dropout named Shawn Fanning wrote a file-sharing program called Napster, the software that kick-started the downloading boom. In that year Australian record companies sold 39.6 million CD albums. Five years later the figure had gone up to 50.5 million. That makes it hard to argue that downloading and CD copying has been killing sales.
But what about the sales of singles, I hear the record companies cry. Singles sales did fall last year by a significant amount. While album sales increased by 7.85 per cent, singles sales went down by 16.5 per cent. But what would you rather? We know which format makes the most money. ARIA wants to stress the drop in singles sales because it suits its argument.
But it's not telling the whole truth. It neglects to mention the record companies are not releasing as many singles as they used to. Sales of singles do not make much money. Singles are these days pretty much released for promotional purposes - to get radio play and drum up interest in an album. In the US, singles have virtually disappeared from sale.
But what about our research, I hear the record companies scream. ARIA paid a research company to survey music consumers. The survey results suggest there's been a 12 per cent decrease in CD purchases by people who are into file-sharing. The greatest percentage is with the under-17s - people who don't have much money. But the research suggests those with the money, the 45 and overs, are buying more CDs after file-sharing. Now that's a statistic we never hear quoted.
According to Stephen Peach, CEO of ARIA, "The free ride simply can't continue indefinitely at the expense of the owners and creators of music."
If we ignore the rhetoric of record companies caring about artists for a moment, let's think about this. Maybe it's the record industry that's getting a free ride from file-sharing - a massive marketing system that allows music lovers to get exposed to all kinds of music without the record industry having to pay a cent.
I'll tell you what the record companies are paying for now, and it's not scholarships for the struggling artists they say they're trying to protect. It's lawsuits. ARIA is taking on Kazaa and suing university students. American record companies have sued nearly 2000 file-sharers in the past six months. Even the FBI has become involved. It says music piracy has become its third priority behind terrorism and counter-intelligence. A number of US Congress members who rely on the entertainment industry for campaign funds lobbied the FBI to spend more money hunting file-sharers and CD burners. So now CDs in the US carry FBI stickers warning of fines of $250,000 or five years in prison.
There's been no similar push by Australia's Federal Police. But keep your eyes on the figures - next year could be another record year for album sales and for prosecutions.
Steve Cannane is a Triple J broadcaster.
Excuse me while I go weep for the recording industries. They've got it really rough.
Holy shit, what the fuck are these guys trying to pull? Music pirates are Public Enemy No. 3? Dear god, I can't believe the FBI would waste time with this bullshit. Don't they have serial killers to catch or terrorists to look out for? And damn but the punishment seems a tad harsh. Five years in prison for burning a CD?
