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IFPI: P2P Does Not Increase Music Sales

Responds to recent poll that found file-sharers spend an average of £75 ($123 USD) annually on music purchases versus £44 ($72 USD) for non-file-sharers.

The International Federation of the Phonographic Industry (IFPI) has responded to the recent Digital Music survey conducted for Demos, a UK-based think tank, and as usual it claims the net effect of illegal file-sharing has been to reduce legitimate music sales.

It says that all the survey showed is that there is an “overlap between those people who download music illegally and those who purchase music,” that music fans typically acquire music from a variety of sources, some legal and some not.

“The net effect of illegal file-sharing in the UK and elsewhere has been to reduce legitimate sales,” it adds. “This is why spending on recorded music has fallen every year since illegal file-sharing began to become widespread.”

This is true, consumer spending on recorded music is down 6% since 2007 alone, but it belies the fact that Will Page, the Chief Economist for PRS for Music, a UK-based royalty collecting group for music writers, composers, and publishers, published a study back in July concluding that total music industry revenues are up 4.7% over the same time period.

The money’s there for artists to earn a living it’s just taking different forms as the industry evolves from analog to digital.

I’d suggest that the biggest reason why recorded music sales are down is the fact that consumers can cherry pick their selections. A formerly $20 dollar physical album has been reduced to a single 99 cents digital track. That has to be frustrating for the music industry and really has no solution unless you want to raise prices and push people back into illegal file-sharing.

The IFPI cites numerous academic studies proving its point, though the most suspect is the 2007 British Phonographic Industry (BPI)-funded study that concluded online music piracy will cost the UK music industry £1.6 billion ($2.7 billion USD) between 2001 and 2012.

What the IFPI fails to mention is the numerous other independent studies that have concluded that file-sharing actually increases legal music consumption.

The first is the “The Impact of Music Downloads and P2P File-Sharing on the Purchase of Music: A Study For Industry Canada.” Commissioned by Industry Canada, a ministry of the Canadian federal government, back in 2007, it includes some of the most extensive surveying ever done on the music purchasing habits of the Canadian population.

Among the key findings:

  • For every 12 P2P downloaded songs, music purchases increase by 0.44 CDs.
  • About 50% of all P2P downloads were to preview before purchase or to avoid having to buy an entire CD.
  • Roughly 25% were downloaded because they weren’t available for purchase.

The most recent is the “Consumer Culture in Times of Crisis,” conducted by the the BI Norwegian School of Management, the largest business school in Norway and the second largest in all of Europe, which found that illegal file-sharers purchase the most number of legal digital downloads, and that in fact actually buy 10 times as much music as they download for free

The study looked at almost 2,000 online music users over the age of 15, and asked file-sharers to prove their legal music purchases rather then simply rely on their honesty so it can’t be argued it was bogus.

But all of this won’t matter to the IFPI. It still thinks there are 7 million file-sharers in the UK despite reports that it could be as low as 3.9 million, hardly a problem in a country of 61 million people.

The IFPI has to toe the line and I wouldn’t expect anything less.

Stay tuned.

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