04. Filesharing's Effect on Music Sales
The overwhelming majority of reputable third party research shows that illegal file-sharing has been a key factor in the recording industry’s 22% worldwide sales declines between 1999 and 2004 (Source: IFPI), and the halving in size of the British singles market over 1999-2004.
Below is a comprehensive list of the research into whether illegal file-sharing stimulates or depresses music sales.
The vast majority of this research confirms that the substitutional effect of illegal file-sharing on music purchasing substantially outweighs any promotional effect.
The Leading Question - UK, July 2005
A study that looked at illegal filesharers spend on digital and physical product, concluded that "On average nine potential CD purchases per respondent are lost to piracy each year, with this figure rising to 20 among teenagers." On a positive note, the report also demonstrated a willingness amongst illegal p2p users to use legal services.
http://www.musically.com/theleadingquestion
TNS/BPI - UK, April 2005
A two-year study that tracked the purchasing habits of downloaders against non-downloaders revealed that over time downloaders bought less music; amounting to a loss of an estimated £650million over two years.
http://tinyurl.com/87838
File-sharing: Creative Destruction or Just Plain Destruction - US, November 2004
Economist Stan J. Liebowitz looks at the balance of evidence for & against file-sharing. The report states “the evidence seems compelling that the recent decline in sales can be properly attributed to file-sharing." The paper concludes: “There is strong evidence that the impact of file-sharing has been to bring significant harm to the record industry”.
http://tinyurl.com/dok36
The National Bureau of Economic Research, US, October 2004
The most recent study released by The National Bureau of Economic Research in the US (by the Wharton school University of Pennylvania) states that: “downloading [from unauthorized sources] reduced music expenditure by about 10% but possibly much more”.
http://www.nber.org/papers/w10874
Informa Media Group – US, September 2004
Potential losses to the industry from file-sharing amount to $2.1 billion in 2004.
www.informamedia.com
University of Pennsylvania – US, September 2004
A study of music downloading and purchasing habits of US students found that the music industry was losing the equivalent of one fifth of a sale for each album downloaded from the internet. The survey states that “our conservative estimates indicate that downloading reduced recent purchases by individuals in the sample by about 10% during 2003”.
http://papers.nber.org/papers/w10874.pdf
Forrester Research – Europe, Aug 2004
'Europeans Love Online Music - As Long As It's Free'. More than one in three (36%) music downloaders say they buy fewer CDs because they can download music for free, according to Forrester research. Only 10% say they are buying more. The implications on sales is clear, negative outweighs the positive by a ratio of more than three to one.
www.forrester.com
Pollara – Canada, July 2004
28% of consumers who spent less on music in the previous 12 months said downloading, file-sharing and CD burning were the main reasons they were buying less. 52% of music consumers surveyed who did not download had purchased music in the past month, against only 35% of active file sharers.
www.cria.ca / www.pollara.ca
University of Texas – US, July 2004
Prof. Stan Liebowitz conservatively estimates that file sharing reduced US album sales between 2000 and 2003 by as much as 30%, and “given our current state of knowledge, file-sharing hurts copyright owners (and is) responsible for most, if not all, of the recent decline in sales.”
http://ssrn.com/abstract=583484
TNS Research – UK, March 2004
Study carried out by TNS on behalf of the BPI and BVA (British Videogram Association). Over 2003, music downloaders’ spend on singles and albums declined by 59% and 32% respectively and their overall spending on music declined by one third – among heavy downloaders this figure increased to almost half. Young people also download more and buy less.
www.tns-i.com
Oberholzer & Strumph– US, March 2004
Known as the “Harvard Study”, this study concluded that filesharing’s effect on music sales is “statistically indistinguishable from zero”. However, the oft-quoted report was subsequently dismissed in its academic peer review, which concluded that the research “could at best be taken to be inconclusive”.
http://tinyurl.com/yr5hf
Peer Review (Prof. Stan Liebowitz):
http://tinyurl.com/b32f3
Entertainment Media Research – UK, June 2004
EMR concluded that heavy music buyers are also heavy filesharers. In other words, filesharing threatens the music business’ biggest customers.
www.entertainmentmediaresearch.com
Informa – US, September 2003
Informa predicted in October 2003 that the loss from networks such as Grokster and Kazaa will nearly double to $4.7bn (£2.8bn) in 2008 (estimated at $2.4bn in 2003)
www.informamedia.com
Forrester Research – US, September 2003
Forrester's "From Discs to Downloads" survey found about 20 percent of all Americans download music from the Internet. Half of the downloaders said they were buying fewer CDs.
www.forrester.com
Jupiter Research – US, August 2003
One third of active file-sharers said that they had decreased spending on music since they started file-sharing, while only 16% said spending had increased.
www.jup.com
Edison Media Research – US, May 2003
The heaviest US downloaders have the largest negative influence on sales. Among those who had downloaded more than 100 files, (roughly 16% of respondents), CD purchases fell by 61% in one year.
www.edisonresearch.com
Enders Analysis – Europe, March 2003
Enders’ report, 'Piracy - Will it kill the music industry?' concluded that "digital piracy cost about 35-40% of the reduction in the size of the global music market last year".
www.endersanalysis.com
Forrester Research – Europe, January 2003
The 'WholeView Technographics’ report concluded that 40% of frequent downloaders buy less music than before they began downloading. This damage is not compensated for by the 2% of people who say that they bought through download sampling.
www.forrester.com
