Did LimeWire Shutdown Increase Music Sales? Part II

from the checking-in dept

Mon, May 16th 2011 10:49am — Mike Masnick

Earlier this year, we noted how copyright maximalists were celebrating the fact that according to one (historically untrustworthy) analytics firm, file sharing had taken a massive drop following the shuttering of LimeWire. Of course, I pointed out at the time that those celebrating this were (yet again) focused on the wrong question. So often we hear copyright maximalists talk about how "piracy" must be stopped, but they never seem to want to discuss whether or not that will make people buy again. So, we looked at some of the data provided by some who did believe LimeWire's shutdown had increased sales, but it came up a bit wanting. Still, I'm all about data, and if there really is data supporting the claims that LimeWire's shutdown resulted in increased sales, it might make me reconsider my position on the wisdom of taking legal action against operations like LimeWire.

So, with the recent settlement in hand, it seemed like as good a time as any to look into the data. Of course, it also helped that Capitalist Lion Tamer sent over the latest stats from Nielsen, noting that music sales are up in 2011.

Boom! Case closed. LimeWire's shutdown saved the music industry. Right? Well, actually, no. Doesn't look like that at all. In fact, Nielsen doesn't even mention LimeWire's shutdown in its note about this, attributing much of the increase to the Beatles finally coming to iTunes. And, actually, if you look at the same Nielsen reports going all the way back to 2006, they show music sales going up each year. It's just that more of it is single tracks, rather than full overpriced albums. It looks like the same is true of the latest data as well. If anything, the data suggests a noticeable slowdown in the growth rate. That is, sales are only up 1.6%, this year, which seems significantly down from the growth rate in past years. In 2006, the growth rate was 19%. In 2007 it was 14%. In 2008 it was 10%. In 2009 it was 2.1%.

Perhaps there's some other data to be found, but it's hard to see how there's much of an argument that the shutdown of LimeWire, even if it really did cause file sharing to drop massively, then resulted in an increase in music sales. Kinda makes you wonder about those claims from the RIAA about just how much LimeWire had to do with their problems.... It also explains why the labels were happy to settle for $105 million after claiming trillions in damages from LimeWire. Even the industry seems to know that it's not file sharing that's the real issue.

Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.

Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.

While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.

–The Techdirt Team

Filed Under: music, sales
Companies: limewire, nielsen

48 Comments

If you liked this post, you may also be interested in...

Reader Comments

Subscribe: RSS

View by: Time | Thread

Chronno S. Trigger (profile), 16 May 2011 @ 10:42am

I'll save some time
*Activate troll mode*

No, you're reading it wrong. The growth rate is down by 16.9% from 2006 so the artists lost $27million in the past five years. Do you know how many jobs that could have created? 900. How does it feel to encourage 900 families to starve?

*Troll mode off*

Damn, I almost drained the batteries on that one.
[ link to this | view in thread ]
The eejit (profile), 16 May 2011 @ 11:11am

Re: I'll save some time
How does it feel for 900 families to starve?

IT fells orgasmic - but only if you belong to the MaFIAA.
[ link to this | view in thread ]
charliebrown (profile), 16 May 2011 @ 11:21am

I don't care anymore. In Australia we have iTunes with songs being $1.69 or $2.29 (our dollar is worth $1.10 US so how's that fair?) and they still don't offer us MP3's. I don't have an iPod and I don't want to convert my lossy files to a lossy format. The other main store here is BigPond Music from Telstra. They sell MP3's but they have a fraction of the range of iTunes. Until we can genuinely buy the SONGS we want at a REASONABLE price, file sharing will NOT go away.
[ link to this | view in thread ]
Huph, 16 May 2011 @ 11:45am

Re:
$1.69 or $2.29 a song is completely unconscionable. Those prices are actually leaving a foul taste in my mouth right now.

Can I ask what you would consider a reasonable price? I ask because I'm in a band and we're always discussing proper price points. I think varied pricing based on region is a little anachronistic, but things can get a little complicated when considering the value of the American dollar.

99 cents a song (American) seems decent, but I don't often consider what that cost translates to in a global market.

Personally, being a small act, I support a pay-what-you-want model. Although, what I'd really prefer is a free download/torrents coupled with friendly emails from listeners. I prefer encouraging emails to a dollar. For a lot of musicians it's not about making money, it's more about feeling compelled to keep going. I really don't think people realize what a lonely affair music-making is in the modern era. We don't have a bunch of friends playing music with us in a studio, we play in our bedrooms by ourselves. We don't know any recording engineers, we record our own stuff. We don't know any mixing engineers, we mix by ourselves... in headphones. We don't know publicists, we send our own email blasts. We don't know promoters, we book our own shows. We don't know graphic designers--they don't work for free--we do our own design work. It's hard, it's lonely, and often it's hard to know whether you're even reaching anybody.

If I see that someone has paid for a download, I'm not excited that I made some money, I'm excited that someone cared enough about the music to buy it even as I try to make sure it's available on as many free avenues as possible.
[ link to this | view in thread ]
DannyB (profile), 16 May 2011 @ 11:48am

You must be a pirate!
Sorry. The music industry collective can't sell you legal digital downloads at any price (let alone a reasonable price).

We can't sell you digital tracks because you must be a pirate! You would pirate those files if you could get them!

If we do offer you music, it will be at a price we determine is fair. How does $3.99 per song sound? That includes the extra goodness of draconian restrictions, including the condition that once downloaded you promise NEVER to actually listen to the music -- EVER!

The price must be this high because you must be a pirate! We've got to make up for the lost revenue caused by your inevitable piracy. If we let you have an mp3 file, the next thing you know, you'll actually LISTEN to it! And even worse, you may copy it to more than one device and listen to it! (eg, mp3 player + laptop + mobile phone) And worse of all (gasp!) you might not play it through headphones -- enabling other people to hear it. You must be a pirate!

What's that you say? You could just go buy the entire CD at an overinflated price and rip the track? You pirate! Even though you paid too much for that CD which was 40% filler by weight, you cannot rip the tracks into a more convenient format!

You must be a pirate! A pirate who feels entitled to have things for free! So you think you should be able to buy a CD and then listen to it from your mp3 player, your phone and your laptop? You pirate!

What's that I hear? You think the only choice you have left is to go find an unauthorized copy on those Intartubes so you can enjoy listening to it?

You are a pirate! You prove my point and all of my previous accusations that you are a pirate. Clearly you think the artists and more importantly the poor record label executives should not get paid. Please think of the poor starving record label executives! You think they should go without their bonuses?

Clearly we need a tax on blank media. If you're not going to listen to it on a large CD player as God intended, but instead copy it to convenient digital devices, then you are clearly a pirate! Nobody uses vinyl anymore! By the end of the 20th century everyone had upgraded (and paid handsomely) to CDs. Move into the 20th century already! Those memory cards and blank CD's must be taxed to make up for the revenue shortfall of you not buying our crummy product!

Next thing, you'll think you are entitled to copy your music into the cloud so you can hear it wherever and whenever you want. Spoiled entitled brats.

Oh, and did I say: you must be a pirate?
[ link to this | view in thread ]
Anonymous Coward, 16 May 2011 @ 11:51am

Growth in track sales has slowed at least partly because labels have raised the price of the most popular songs. And that's resulted in an increase in revenue.
[ link to this | view in thread ]
sumquy (profile), 16 May 2011 @ 12:04pm

Re: Re:
your almost there, but not quite. stop thinking of yourself as a seller of music; your music is advertising for everything else you do. that everything else should include concert tickets, tshirts, film and tv placements, those little plates like the ones of william and kate (except with your picture of course), and anything else you can think of, but don't fool yourself into thinking that you are selling music. your not. music is free (not a statement of morality, just one of fact). some people choose to make donations to bands they really like, but the key there is getting people to like you, not counting on their donations.
[ link to this | view in thread ]
Richard Thomas, 16 May 2011 @ 12:04pm

Missing Statistics?
Where are the 2010 figures? Their absences in this article and the linked article are conspicuous. Not that they would say much as the figures are (as best I can make out) for annual growth not growth in the first four and a half months. I'm not sure how the digital factor affects it but people's shopping habits are definitely different during warmer months and at the end of the year.
[ link to this | view in thread ]
Bob, 16 May 2011 @ 12:11pm

Unlimited Streaming Services
I wonder how much streaming services (Spotify, Zune Pass, etc.) and Internet Radio (Pandora, Last.fm, etc.) have affected the sales of music?

I also wonder how much the sale of single songs would PLUMMET if Apple introduced an iTunes streaming subscription service as it seems they have been rumored to for years now.
[ link to this | view in thread ]
Anonymous Coward, 16 May 2011 @ 12:33pm

Apparent Techdirt definition of copyright maximalist:

Anyone that enforces copyright.

btw, you know when else singles cost 99 cents?

1974.

Needless to say, it's not the record labels or musicians that are greedy, but the pirates that are greedy.
[ link to this | view in thread ]
tuna, 16 May 2011 @ 12:34pm

At the time Limewire was shut down was there anyone still using it?

Everyone I know dropped it years ago.
[ link to this | view in thread ]
Anonymous Coward, 16 May 2011 @ 12:39pm

Re: Re: Re:
Stop spouting nonsense.

People don't really care about t-shirts, they want the music.

Most people don't go to concerts, they just want the music.

You sell what people desire most and that is recorded music.

It isn't free- you're ripping it off.

So stop complaining when laws are enforced.

When you do that you just sound like an entitlement douchebag.
[ link to this | view in thread ]
Jay (profile), 16 May 2011 @ 12:51pm

Re: Re:
Well, how exactly are you promoting yourself? Do you have a Youtube channel? Twitter? Myspace? Linkedin? How do people get in contact? Do you do live streams? Requests? Covers?

What projects are you working on? What can you give customers to look into and keep as a memento?

I just saw a band two nights ago that had some awesome songs. What really cinched me remembering the band was the fact that the bassist had a top hat.

The band's name was Moniker, and they did a damn good job.

Just find ways to make yourself stand out in your genre and don't be afraid to play anywhere and everywhere. It sounds like you all are on the right track and like sumquy says you're not in the business of selling music. When people like you, the money will follow.
[ link to this | view in thread ]
Anonymous Coward, 16 May 2011 @ 12:55pm

Re:
stay on topic TAM

this should be a post about your great victory over limewire
[ link to this | view in thread ]
artistrights (profile), 16 May 2011 @ 12:57pm

if you look at the same Nielsen reports going all the way back to 2006, they show music sales going up each year

The Nielsen percentages you cite aren't based on track-equivalent albums (TEA), which is what the 2011 1.6% figure is based upon. The 2009 TEA sales percentage was -8.5%, 2008 was -8.5%, 2007 was -9.5%, and 2006 was -4.9%.
[ link to this | view in thread ]
Anonymous Coward, 16 May 2011 @ 12:57pm

Re:
TONS of people. Anyone tech savy had moved on but for the average "i can barely check my email without downloading a virus" users it was limewire. I worked at in personal computer repair for a few years and got out just last September, the majority of my customers were people who got viruses form using limewire. Gotta love those 6kb album downloads
[ link to this | view in thread ]
Anonymous Coward, 16 May 2011 @ 1:00pm

Re: Re: Re: Re:
well somebody sounds like a douchebag....
[ link to this | view in thread ]
Anonymous Coward, 16 May 2011 @ 1:08pm

Re:
LOL

Thank you for pwning Mike Masnick here; this is the second time in less than a week that he's been in such a rush to defend piracy or snark at record labels, that he ended up sloppily posting easily preventable errors.

Way to go Masnick!
[ link to this | view in thread ]
harbingerofdoom (profile), 16 May 2011 @ 1:20pm

Re:
huh. so the cost to release a single has dropped to near zero yet the price has stayed the same or gone up.

but its the pirates that are greedy.

mmkay...whatever..
[ link to this | view in thread ]
Anonymous Coward, 16 May 2011 @ 1:24pm

Re: Re:
idk, the numbers he had made it look like music growth had slowly been declining and this was another year of the same.

These corrected numbers show a huge drop in sales compared to the last few years, barring 2010 of course.

Yes he is quite the piracy defender, how dare he look at the effects, or lack thereof, that closing a major pirating outlet has on music sales. DAMN YOU AND YOUR FACTUAL DISCUSSIONS MASNICK
[ link to this | view in thread ]
Anonymous Coward, 16 May 2011 @ 1:27pm

Re:
In 1974 you weren't buying digital copies of music. There was a physical inventory kept, shipping costs, manufacturing costs, etc. So considering how much cheaper is it to get music out to the masses now, I'd think 99 cents is pretty damn fair.
[ link to this | view in thread ]
harbingerofdoom (profile), 16 May 2011 @ 1:29pm

Re:
nifty.

explain it please.
[ link to this | view in thread ]
Chronno S. Trigger (profile), 16 May 2011 @ 1:31pm

Re:
I don't get it. People are buying more music overall, but people are buying less music? And I'm just talking the 2006-09 numbers since those are the ones we can properly compare.

And if you're correct and that 1.6% figure is using a different counting method, then the method used in the article for 2006 to 2009 should be an insane increase for 2011, right?
[ link to this | view in thread ]
Marcus Carab (profile), 16 May 2011 @ 1:44pm

Re: Re: Re: Re:
People don't really care about t-shirts, they want the music.

Most people don't go to concerts, they just want the music.

Steadily growing concert attendance numbers and the insane amount of money countless creators make from merchandise would suggest otherwise.

You sell what people desire most and that is recorded music.

You seem to have forgotten about the supply half of supply and demand. When supply is infinite, the price trends towards zero, no matter how high the demand is. You can't fight it.
[ link to this | view in thread ]
Anonymous Coward, 16 May 2011 @ 1:51pm

Re: Re: Re: Re: Re:
Why is it a law again? Oh, right, we're not supposed to question the laws that supposedly help us, I forgot, how dense of me.
[ link to this | view in thread ]
Marcus Carab (profile), 16 May 2011 @ 1:54pm

Re:
interesting if true but I don't see the discrepancy in the numbers linked from this post - it looks like they are all referring to the same neilsen statistic on total music sales. Can you provide links to clarify?
[ link to this | view in thread ]
Anonymous Coward, 16 May 2011 @ 1:56pm

Re: Re: Re:
"These corrected numbers show a huge drop in sales compared to the last few years, barring 2010 of course."

missed the -

I stand self-corrected
[ link to this | view in thread ]
lol, 16 May 2011 @ 1:57pm

Re:
In 1974 $0.99 is equivalent to $10 2011 dollars.

And yes, if that's what TechDirt agrees is a copyright maximalist, then I agree! Copyright has never served a useful purpose for...

damn I'm feeding the trolls, sorry I'll stop :)
[ link to this | view in thread ]
Anonymous Coward, 16 May 2011 @ 2:14pm

of course the numbers went up after limeware was closed down, and the RIAA would produce the numbers to prove it but then they would have to pay the artists...
[ link to this | view in thread ]
Gwiz (profile), 16 May 2011 @ 2:20pm

Re: Re: Re: Re:
You sell what people desire most and that is recorded music.

I would think a smarter business move would be to sell what people are willing to pay for.

And in this day and age, with the ability to get pretty much any music that you want for free, people don't want to pay $15 for 10 songs anymore.

Sure people desire recorded music - they just don't want to pay the prices that are being asked for something that has almost zero material and distribution costs. And before you start, I am aware that there are upfront costs in recording music, but these are becoming lower and lower as technology advances and smarter business model emerge. I really have no problem paying for that aspect of the purchase.

I guess I just don't understand why I should pay the same price for digitally downloaded music and a physical CD.

It isn't free- you're ripping it off.

Making copies is pretty much free - even if you wish it wasn't. I still purchase my music on CD's - just so I can rip it to whatever device I choose, whenever I choose, in whatever format I choose.

So stop complaining when laws are enforced.

Only if you stop complaining when silly oppressive laws that go against human nature are ignored by the general public.
[ link to this | view in thread ]
Anonymous Coward, 16 May 2011 @ 2:39pm

Re:
yeah and for that dollar, I got a piece of vinyl, a sleeve, maybe an insert, and a WAAAAY higher quality version of the song.

Now I get a digital super lossy version and no feelys for the same price.

what a deal!!!!
[ link to this | view in thread ]
Anonymous Coward, 16 May 2011 @ 3:05pm

Re:
This is true. I stopped using it years ago. It was so infested with viruses etc. I moved on to better technology.
[ link to this | view in thread ]
Anonymous Coward, 16 May 2011 @ 3:22pm

but, but pirates!!!!
[ link to this | view in thread ]
Richard (profile), 16 May 2011 @ 3:27pm

Re: Re:
Can I ask what you would consider a reasonable price?

A price that reflects the cost of providing the download service - plus a profit which is a reasonable percentage.

The Russian Music site Rumvi.com offers a lot of stuff at prices that look reasonable to me - and you can stream everything for free.
[ link to this | view in thread ]
Richard (profile), 16 May 2011 @ 3:33pm

Re:
btw, you know when else singles cost 99 cents?

1974.

How much was the profit margin then?
How much is it now?
How much would singles cost now if the profit margin was reduced to what it was then (even if the artist's cut was unaffected)?
[ link to this | view in thread ]
Richard (profile), 16 May 2011 @ 3:38pm

Re: Re:
Hint - on Rumvi a typical 4 minute song costs 15c.

Even if you added the iTunes artist cut ( around another 15c) to that you still get no more than around 1/3 of the iTunes price. Therefore you can conclude that iTunes definitively is a total rip-off.
[ link to this | view in thread ]
Anonymous Coward, 16 May 2011 @ 4:19pm

Re: Re: Re: Re: Re:
It isn't free- you're ripping it off.

Making copies is pretty much free - even if you wish it wasn't. I still purchase my music on CD's - just so I can rip it to whatever device I choose, whenever I choose, in whatever format I choose.

-------------

Our computers our doing at least half the work in any case - actually making the copy, storing the copy, enabling function of the copy, using bandwidth that we pay for to download the copy...

Nice racket.
[ link to this | view in thread ]
Anonymous Coward, 16 May 2011 @ 5:26pm

Re: Re:
Physical copies of singles cost $0.99 back in 1974. You had to manufacture, distribute, and shelve all those singles.

But a single in 2011 costs the same amount?

Sounds like a rip-off to me!
[ link to this | view in thread ]
RadialSkid (profile), 16 May 2011 @ 6:13pm

Re: Re: Re: Re:
It isn't free- you're ripping it off.

Listening to Ex Animo's Sentience as I type this...FREE and legal.

You mad?
[ link to this | view in thread ]
TypoFlood (profile), 16 May 2011 @ 10:33pm

Re:
No, the definition is anyone who thinks that our current copy protection laws shouldn't be substantially repealed. Anyone seeking to expand our already outrageously overarching copy protection laws (ie: 95+ years among their many other problems) through bills like COICA and ACTA.

These laws need to be substantially repealed, not expanded, and anyone that disagrees is reasonably an IP maximist.
[ link to this | view in thread ]
Anonymous Coward, 17 May 2011 @ 12:18am

eMusic pricing
I'm a member of eMusic.com and I pay around 25cent a song.
I think that is a fair price for a digital download.

I still buy CD's but I wait till they are reduced in price. Although I can afford it, 20 � for a new CD is too much. Make it 10 � and I'll consider buying it.

Also why is the price of a CD always the same? It doesn't matter if it is an unknown indie band that recorded in their garage or a big RIAA artist that has the biggest producers and a marketing campaign of 1 Trillion dollars. Price is always the same 20�, but they have different production costs.
[ link to this | view in thread ]
Paddy Duke (profile), 17 May 2011 @ 2:01am

Motherf... so the failure of digital music sales was The Beatles' fault this whole time?
[ link to this | view in thread ]
Anonymous Coward, 17 May 2011 @ 3:05am

Re: Re:
pwning, my ass.
[ link to this | view in thread ]
Anonymous Coward, 17 May 2011 @ 7:37am

When will Mike post a correction noting that he compared 2011 TEA music sales to past music sales based on an entirely different methodology?

"Bucking a years-long trend of decline, U.S. music sales continued this year's upward swing, rising 1.6% through May 8, according to Billboard analysis of Nielsen SoundScan data. The gain is measured in track-equivalent albums (TEA), which combines the unit sales of albums and digital tracks into a single, comparable number." - Billboard

As artistrights pointed out above, all of the positive percentages Mike cites were not calculated using TEA. Mike's entire comparison is based on a false analogy. Music sales are WAY up in 2011.
[ link to this | view in thread ]
Hephaestus (profile), 17 May 2011 @ 7:56am

"The reality is:

More musicians are making money off their music now then at any point in history.
The cost of buying music has gotten lower but the amount of money going into the artist's pocket has increased.
There are more people listening, sharing, buying, monetizing, stealing and engaging with music than at any other point in history.
There are more ways for an artist to get heard, become famous and make a living off their music now than at any point in the history of this planet.
Technology has made it possible for any artist to get distribution, to get discovered, to pursue his/her dreams with no company or person out there making the editorial decision that they are not allowed �in�.
The majority of music now being created and distributed is happening outside of the �traditional� system. "
[ link to this | view in thread ]
charliebrown (profile), 17 May 2011 @ 9:44am

Re: Re:
You are indeed on the right track. Promoting yourself is one of the harder aspects from what I've seen. I am not a musician but a consumer and yes there is a lot of good new music out there but I'm never sure how to find it (I hate most of the current "Top 40" stuff)

YouTube, FaceBook and Twitter are useful tools. As Mike says, though, these are only a part of it. For example, Mike recently posted about the band Hollerado and linked to one of their videos. I thoroughly enjoyed the video but found myself bouncing (slightly) in my chair to the song as well. I shared that video on FaceBook and while a few of my online friends also liked it, I think I'm the only one who has gone so far as to find out more about them.

So while simply posting a video is a start, it is not the way by itself. I noticed Hollerado because Mike mentioned them on this blog. I would have probably never heard of them otherwise. Word of mouth promotion, even via social networks, is a tricky beast. Information - like music - is plentiful, attention is scarce. So while music is your passion, your job is to get people's attention. Grab the right person's attention and before you know it, you'll be where you want to be :)

How about a link to your band's site please? :)

As for a reasonable price per song, it depends on the song. I'd be more than happy to swing a dollar (or even two) over to Hollerado, for example, for their "Hey Philadelphia!" song. But a song that was a major label hit 10-to-50 years ago, I would only want to pay in the area of 10c to 20c, again depending on various factors. If, for example, David Bowie offered me a download of his "Ziggy Stardust" album for $10 but I knew most (if not all) of it was going to him and the band and crew he recorded it with, I'd jump at it. If, on the other hand, EMI was getting most of it, then I couldn't care less.
[ link to this | view in thread ]
HothMonster, 17 May 2011 @ 2:04pm

Re:
1.6% may be up but its not all capital WAY up

I have been under the impression that music sales have been going up for the last 5-6 years. I would love to see where artistrights got his info from but no link, no love
[ link to this | view in thread ]
Anonymous Coward, 17 May 2011 @ 3:48pm

Re: Re:
1.6% may be up but its not all capital WAY up

Going from negative 8-10% to +1.6% is way up, because that percentage was calculated based on TEA not total music sales (i.e., 10 single sales = 1 album). The links to the annual reports are right there in Mike's article here. However, you need to look at "Overall Album Sales" with TEA, because that is how the 1.6% was calculated.
[ link to this | view in thread ]