Who should we believe? The RIAA or empirical data?
As part of a larger discussion on copyright, we (JoMC 711) recently discussed RIAA claims that file-sharing and illegal downloading are directly responsible for lost music sales. In fact, the RIAA blamed file-sharing for its nearly 11% drop in sales in 2002, even though due to 9/11, the entire economy was down in 2002.
I’ve long believed that most downloads are of songs that would not be purchased under any circumstances. On the contrary, I believe that the more we are exposed to, the more we likely will indeed buy, having benefited from sampling a little of this and a little of that. It’s why Indian restaurants have buffets. If we could try a little lemongrass soup and the curry of the day, we might come back and buy a lot. By being able to listen to one song by a band we’ve never heard of, we might find we really dig it and decide to plunk down the money to buy a CD or a lot of songs by that band.
My students in JoMC 711 unearthed evidence that in fact, file-sharing does likely boost music sales rather than dilute from them. Rebekah Radische found the 2004 paper, “The Effect of File Sharing on Record Sales An Empirical Analysis” (warning: PDF download), by Harvard’s Felix Oberholzer and Kansas U’s Koleman Strumpf. They concluded that:
“. . . file sharing has no statistically significant effect on purchases of the average album in our sample. Moreover, the estimates are of rather modest size when compared to the drastic reduction in sales in the music industry. At most, file sharing can explain a tiny fraction of this decline. This result is plausible given that movies, software, and video games are actively downloaded, and yet these industries have continued to grow since the advent of file sharing.”
More evidence from C|Net
Another student wondered why the RIAA would make such a big deal about lost sales, even resorting to suing its own customers by the thousands, if there wasn’t some fire in the middle of all that smoke. Hmm… Maybe it is because we resent an $18 price when we know the disk required only about $1 to produce? Maybe it is because the RIAA is so entrenched, so afraid of change and loss of control, that it is willing to recklessly sue dead people and grandmothers rather than adapt and change.
It all is reminiscent of the oligopolistic big distribution companies’ reaction to radio, which they believed would kill sales. Of course the effect was the opposite. Major League Baseball fought televised broadcasts of its games, fearing that folks would stay home and not want to go to the ballpark. The league actually restricted ABC to two cameras for fear that too much realism would siphon off ticket sales. It’s not about “piracy” and “theft” and the erosion of our national moral fiber. It’s about control and money-grubbing greed.