On Tuesday, the Recording Industry Association of America filed another round of lawsuits against people who allegedly downloaded and shared copyrighted music. In doing so, the association finally topped the 3,000-served mark. The association argues that file sharing is directly responsible for the widely reported slump in CD sales from 2000 to 2003. This, however, ignores the fact that the economy was in a post-Sept. 11 recession and that many other industries suffered even greater declines in their sales at the time.
Still, it is reasonable to assume that downloading was a cause of some drop in CD sales. But this simple narrative is a bit more complicated. The two primary direct competitors for young music buyers’ dollars — video games and DVD’s, both also widely and freely traded on the Internet — continued to do quite well. And during the first quarter of 2004, CD sales in the United States rose 10.6 percent over the previous year, an upturn that the recording industry association confidently attributed to its lawsuits. But a report issued in April by the Pew Internet and American Life Project stated that the number of people who said they had downloaded music files during the same first quarter had increased by 5 million, to a total of 23 million, from the project’s previous survey in late 2003. In other words, at the exact moment file-sharing activity rose, so did CD sales.
These numbers supported an economic study by Profs. Felix Oberholzer-Gee and Koleman S. Strumpf. Their findings indicated that file sharing had no measurable effect on music sales. “At most, file sharing can explain a tiny fraction of this decline,” the professors concluded. These men are not anti-copyright activists by any measure — Mr. Oberholzer-Gee is a professor at the Harvard Business School and Mr. Strumpf is a visiting fellow at the Cato Institute.
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