Canadian Gov’t Study: P2P Increases CD Sales

Most extensive surveying to date of the Canadian population on music purchasing habits concludes that there is a positive correlation between file-sharing and CD sales.

The Impact of Music Downloads and P2P File-Sharing on the Purchase of Music: A Study For Industry Canada is a a newly commissioned study by Industry Canada, a ministry of the Canadian federal government, and includes some of the most extensive surveying to date on the music purchasing habits of the Canadian population .

Conducted by Birgitte Andersen and Marion Frenz of the Department of Management at the University of London in England, the study concludes that illegal file-sharing does not cause a decrease in music sales as the music industry has insisted all along. In fact, it does just the opposite, in that it apparently tends to actually INCREASE music purchasing.

“Our review of existing econometric studies suggests that P2P file-sharing tends to decrease music purchasing,” says the study. “However, we find the opposite, namely that P2P file-sharing tends to increase rather than decrease music purchasing.”

What makes the study so fascinating is that it’s been commissioned and released with the blessings of the Canadian Federal Government and not some self-serving poll commissioned by the music industry.

Among the key findings:

  • For every 12 P2P downloaded songs, music purchases increase by 0.44 CDs. That is, downloading the equivalent of approximately one CD increases purchasing by about half of a CD.
  • No relationship between P2P file-sharing and purchases of electronically-delivered music tracks (e.g., songs from iTunes).
  • Roughly half of all P2P tracks were downloaded because individuals wanted to hear songs before buying them or because they wanted to avoid purchasing the whole bundle of songs on the associated CDs and roughly one quarter were downloaded because they were not available for purchase.
  • Only the effect of illegally downloading music that is not available for purchase influenced music purchasing, with a 1% increase in such downloads being associated with nearly a 4% increase in CD purchases.
  • People who also own an MP3 player appear to be less likely to purchase CD albums.

The study also found that other forms of entertainment such as movies, concert tickets, and video games tend to increase with music purchases. It has been argued in the literature that the increase in the number of entertainment choices has led to a decline in music purchasing, but the study concludes otherwise. It found that a reported interest in music is very strongly associated with music purchases.

Moreover, this analysis of the Canadian P2P file-sharing subpopulation suggests that there is a strong positive relationship between file-sharing and CD purchasing. That is, among Canadians actually engaged in it, P2P file-sharing increases CD purchasing. Furthermore, it finds indirect evidence of the ‘market creation’ effect of P2P file-sharing when music is otherwise unavailable.

The study is somewhat difficult to sort through, but the conclusions are unmistakable: file-sharing actually benefits music sales. It basically confirms what I’ve said all along and that’s that BitTorrent tracker sites like OiNK actually made better music fans of us all and allowed us to discover new music that we wouldn’t have found otherwise. You can read the study for yourself here.