Business Matters: A New Look at an Old Survey Finds P2P Hurts Music Purchases
Business Matters: A New Look at an Old Survey Finds P2P Hurts Music Purchases

A New Look at An Old Survey Finds P2P Hurts Music Purchases
-- A controversial 2007 paper on P2P's impact on CD purchases has got a second look -- with conclusions the music industry will like. A new paper based on the same survey data used in that 2007 paper finds clear evidence that P2P has negatively impacted music purchases in Canada. The survey was conducted by Decima Research and commissioned by Industry Canada in order to support the governmental department's policy decisions regarding copyright.

For this new paper, Dr. George R. Barker of the Australian National University re-examined the survey data. A link to the working paper can be found at the website for the Australian National University's College of Law. The original analysis of the data was released in 2007 report by Industry Canada. It was widely covered in the media for its pro-file-sharing message but was also criticized by some academics.

In a nutshell, Barker claims the 2006 survey shows "strong evidence" that P2P services reduce the amount of music purchases.

Here's some more explanation. Respondents were asked what percent of songs downloaded free at P2P services would they have purchased in either digital or CD format. Three out of four respondents answered they would have purchased more music if P2P were not available. Nearly two-thirds of "hardcore" P2P users -- a group that acquires music only via P2P services -- said they would have purchased one-third of their tracks if the songs were not available on P2P networks. Barker estimates the incremental revenue from these hardcore users would amount to $168 per year.

"Based on this data," Barker says, "I therefore conclude that P2P downloads have strong negative effects on legitimate music purchases and, contrary to the original analysis of the data, P2P downloading acts as a substitute for legitimate music purchases. One can infer from this analysis that stronger copyright laws would substantially increase music purchases and music industry sales revenues and, by implication, increase artist income and industry employment and contribute to both economic growth and higher government tax revenues in Canada."

As for the 2006 paper, its authors revised their original conclusions for a 2010 article in the Journal of Evolutionary Economics. Barker notes the authors now make a weaker claim that there is "no association between the number of P2P files downloaded and CD album sales" yet still insist "P2P fille sharing is not to blame for the decline in CD markets."

Barker's re-examination of the 2006 survey comes at a critical time. Some of the criticism against SOPA -- and against anti-piracy tactics in general -- is rooted in the belief that file sharing does not hurt entertainment companies and content creators.

But there is a growing body of evidence that file sharing does have a negative impact on purchases and adoption of legitimate services. Most recently, the IFPI's "Digital Music Report 2012" points to a study that found anti-piracy efforts in France had a positive impact on digital purchases.

Other academics are also revisiting earlier studies. A working paper by Dr. Stan J. Liebowitz, released in November, finds that "the estimates from a majority of studies (on the impact of file sharing) imply that that file-sharing has caused the entire decline in sound recording sales that has occurred since the ascendance of Napster." And as the Copyhype blog notes, one examination of 22 file-sharing studies found that 14 of the studies concluded that unauthorized downloads have a "negative or even highly negative impact" on music purchases.
( ANU College of Law, via Barry Sookman)

Ticketfly Touts Impressive 2011 Numbers
-- A day after Eventbrite released some numbers from 2011, Ticketfly put out some figures showing it too grew mightily last year. The company says its ticket sales, revenue, clients and employee headcount doubled from 2010. In addition, existing customers experienced a 16-percent increase in ticket sales compared to 2010.

"The 16 percent increase in ticket sales, on average, that Ticketfly clients experienced is in large part attributable to the platform innovations we've introduced and our focus on the consumer experience," CEO Andrew Dreskin explained in the blog post. One of those innovations is a snazzy new Facebook app released in January. The app creates an easy, streamlined way for fans to purchase tickets, follow the bands on Facebook and spread the word to friends -- without leaving the Facebook page.
( Ticketfly blog)

Coldplay Finally Releases 'Mylo' to Subscription Services
-- Maybe the outcry over subscription service holdouts will subside a bit now that Coldplay's "Mylo Xyloto" showed up on Spotify, Rdio, Rhapsody and Mog on Wednesday -- 100 days after its release in October.

There are a couple lessons here. One is that some artists are in a better position than others to create temporary scarcity. The hubbub over the absence of "Mylo" -- a hot digital music topic last quarter -- shows not all of the 76,875-plus albums released in 2011 were created equal. Some artists want the visibility that comes with being on Spotify. They want people to listen to and share their music. But artists that don't lack the ability to raise awareness may operate differently. Asking people to wait three months to stream "Mylo" on subscription services probably didn't impact Coldplay. With 1.1 million albums and 1.8 million tracks in the U.S., according to Nielsen SoundScan, it's hard to find evidence of scars from the incident. But if a hot new artist like Lana Del Rey wasn't on subscription services, some momentum might be lost as curious consumers miss the chance to listen.

The other lesson is that a handful of no-shows aren't that much of a problem, either. Lacking some big new releases doesn't put subscription services in the best of light, but consumers appear to have taken it in stride. After all, Spotify alone gained 500,000 subscribers between late November and January -- right when the Coldplay story was in the news.

"We're talking about extreme corner cases," Spotify's chief content officer Ken Parks told last month. "These are rare cases. The overwhelming number of artists, managers and labels are solidly behind this model."