Latest Research Shows No Noticeable Impact On CD Sales From Downloads
from the oops dept
Papa Fox writes in to point to the latest economics study on the impact of file sharing on CD sales. It's done by two economists, Felix Oberholzer-Gee and Koleman Stumpf (rather than the RIAA studies, which are all done by companies hired by the RIAA and whose statistical methodology always has huge holes -- such as counting downloads automatically as "lost sales" or simply getting basic math and economics wrong). This latest study, with help from a bunch of extremely well-known and well-respected economists (including the guy who first taught me economics), found that "downloads have an effect on sales that is statistically indistinguishable from zero." Admittedly it is a difficult thing to work out the direct impact, but they did a few ingenious things to try to account for different variables weighing in on sales and downloads. From the short review of the paper (the full paper isn't available to see), they tried to account for various possibilities by looking at when German schoolkids were on holiday -- assuming that would not impact US sales. It would be nice to see a few more details from the report, but this is just the latest in a series of research coming from academics showing no real impact to sales from downloads -- which is also supported by stories like the success of the Shins' latest album after it was leaked to the internet months before it was released. Of course, we still don't expect the RIAA to accept the idea that downloads act as free promotion -- though it does seem odd that they won't believe actual research that suggests they're wasting an awful lot of effort on things like lawsuits and DRM. You would think that actual data would be more convincing than superstitious beliefs when it comes to how you're wasting your money.
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Downloading and CD sales
So, although I think the RIAA is on the wrong track, I can understand their fear. Of course, since you can easily rip a CD and share it, they should drop the DRM on paid downloads, and focus on making content easy to buy.
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As to being easy to buy, you can download through a number of download stores (iTunes, etc) and you can order CDs through many online stores. I think it is easier than using BitTorrent, since marketers make far more effort to organize their sites to make it easy to find music.
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CD pricing is usually market priced - based on what people are willing to pay. They usually come down in price after they have been on the market for a while. CD pricing is never based on number of songs, but number of minutes may influence the price; however, the trend is to ignore time as well. It is notable that some recent releases have been 2 CD sets at 1 CD pricing, and some bands have released CDs with barely 30 minutes on them.
Per song pricing being fixed price is a problem, but the argument has been that people will only generally buy the most popular songs, or they will buy the album (whether via download or CD). So, there has not been a real push for market pricing. Of course, that also means that some $.99 tracks are 10 minutes and some are 3, but fairness is not about cost per minute, but how much you enjoy it (value to you). Truthfully, if you play a 10 minute song 4 times before you tire of it, it is a much worse deal than a 2 minute song you listen to 100 times.
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the problem
Example:
If sales decrease, it's because of piracy... we need more DRM and lawsuits.
if sales increase, it's because of DRM fighting piracy, so we need more DRM and lawsuits.
no matter what happens, it fits their model, and we get more DRM and lawsuits.
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Re: the problem
Example:
If sales decrease, it's because of piracy... we need more DRM and lawsuits.
if sales increase, it's because of DRM fighting piracy, so we need more DRM and lawsuits.
no matter what happens, it fits their model, and we get more DRM and lawsuits.
that's brilliant. you hit the nail right on the head.
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I do think the RIAA is being kind of stubborn though. They really should embrace digital music in one way or another. As far as cds being old technology, that's like when I said books will be old technology. Nice to think about, but might not happen for hundreds of years. ;)
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And if parents were more involved in their children's internet experience, I doubt they would have the opportunity to pirate.
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Nice study, but its in the minority
I'll do a write-up of the studies I've looked in some time in the next few weeks.
An interesting thing about sales displacement studies is that they address dead weight loss and consumer welfare. To some extent, piracy is good for society when it occurs at limited levels. Society benefits b/c consumers obtain goods/services that that otherwise would not have translated to legal transactions. However, there is a point where piracy displaces transactions that would have happened, and affects the ability of producers to raise prices; in such scenarios, piracy has a negative effect on revenue, and consumer welfare.
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Seriously. CD's are old technology.
The RIAA's pushing old technology, when there is MUCH better out there.
CD's wear over time, get scratched, etc.
Digitial Music never degrades, never gets scratched.
I put my entire collection of CD's on 2 DVD's. The whole stinkin' thing. Of course, I didn't rip every track, just what I wanted.
Now I can make 2 copies of those DVD's - even if one gets scratched or my PC crashes, I have a back up.
Even if my DVD's both get scratched, and my Hard Disk crashes I have a copy of them all on another PC.
Now if a music service was to allow you to create an account on their servers, that tracked your purchases, so that not only could you listen to them from anywhere, but copy them back to your computer if you had a 'technical' issue, the value would be far and above that of a CD by far.
So while I still must use a DVD to backup my music, the fact is that I'm not Dependant on a SINGLE CD to preserve the music I BOUGHT.
I think far and above anything else, this is what the RIAA hates - it's unlikely that they will be able to sell you the same music 4 times. Like they always have done.
If that's *not* true - why hasn't the music industry already put up servers where you could buy music, and their databases would keep a record of what you had purchased?
Other industries do it - even Amazon remembers what you have bought. There's a game online called 'Galatic Civ 2' - you buy it online, and if you ever crash your PC, you simply login to their site and re-download the game - FAR better value than a physical CD that's prone to damage.
Computers in concept now are very fault tolerant, a Physical CD isn't - unless you make copies.
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$5.15 per hour?
1) Wow. I don't know that I would've ever worked minimum wage while in college. (I think I started at $5.50 in 2001 on the Work-Study program...Fed. tax free so was worth more).
2) When I was making $10 per hour as a junior I still didn't buy CDs.
3) I make more than that now and do buy CDs.
Why do I buy CDs now (I'm 23...I'll be out of college 2 years in May)? I figured out a lot of the genres that I liked and know the ones that I dislike. Being able to download lots and lots of songs and listen to them as I please helped me to learn the types of genres I'm interested in and the ones that I just can't stand.
Now I visit a band's website or Amazon or some place and listen to the songs (occasionally I still download a full album to hear the album) so that I can know the CD is worth it. I always buy the full cd because I don't want to be held in place by DRM and this way I have 100% proof that I bought the content for my use.
Anyway, being able to freely obtain music from my peers helped me to broaden my musical tastes and understand myself a little more. (I.e. I used to only listend to Country and bluegrass, now I enjoy punk, ska, some rock, and the occasional rap song....I would've never had that exposure without downloading some songs).
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Re: $5.15 per hour?
You just completely contradicted what i Said. you said that you didn't buy cd's when you made 5.50 or even when you made 10. My point exactly, people who make lots of money will buy CD's. Most college kids or high school kids don't make more than 10 bucks an hour last time I checked. Of course, i'm glad you can test the music online before you buy... but your probably making 3 times as much as a high school kid working full time. and you mentioned 5.50 an hour, big fuckin woop... that's an extra 14 bucks a week , almost enough to buy a cd ;)
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Hehe piracy
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Re Unpaid Artists
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If you can't afford to buy the CD listen to the radio.
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MP3s make tradeoffs, but can you tell
But, the loss model of MP3 (and WMA) is intended to throw out what you would not notice, though it can affect "brightness" or "ambiance" (the barely heard part of music).
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what about records and tapes?
I wonder why they continue to hang onto CD's and there are DVD's and now HD-DVD's. This means that the music industry is behind in the delivery of media content by two generations by still using CD's.
Maybe that's the problem. Because CD's might explain why record and tape sales have all but died off. So DVD's and now HD-DVD's might explain why CD's are dying off.
And this doesn't even factor in downloadable content, which is going to be a replacement eventually for all of those formats, assuming the telco's can stop screwing up things and catch up with Asia when it comes to broadband.
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Long live the CD (well, good ones)
There is a sizable market for high quality CDs - classical, jazz, fusion and others. These folks demand the high performance of CD, and laments the apparent demise of SACD. To us, music and reproduction is serious art and and we can show our multi-thousand dollar equipment and collection to prove it. Only well-produced CDs can recreate wide soundstage, precision imaging, distortion free sound, and deep clean bass. MP3 and other compression methods, no matter how advanced, destroy much of these quality. Every CD we buy is a well-considered decision, and we gladly pay top dollars. Smart music executives pay attention to the 'serious' market, and don't get swept up with cheap downloaders and throw-away music.
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http://arstechnica.com/news.ars/post/20070212-8813.html
they seem to do this damn near every day. just about every obscure techdirt story shows up on ars a day later.
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Copy of the research article
www.p2pnet.net/zero/FileSharing_March2004.pdf
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Copy of the research article
www.p2pnet.net/zero/FileSharing_March2004.pdf
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Copy of the research article
www.p2pnet.net/zero/FileSharing_March2004.pdf
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