Industry Canada-commissioned study found that “P2P file-sharing tends to increase rather than decrease music purchasing,” but the Canadian Record Industry Association has released a study that claims that the opposite is true, that P2P decreases overall music sales.
Back in 2007 Industry Canada, a ministry of the Canadian federal government, released the results of an independent study it commissioned on the effects of illegal downloading entitled “The Impact of Music Downloads and P2P File-Sharing on the Purchase of Music.”
Conducted by Birgitte Andersen and Marion Frenz of the Department of Management at the University of London in England, the study made the startling conclusion that there is a positive correlation between file-sharing and music sales.
“Our review of existing econometric studies suggests that P2P file-sharing tends to decrease music purchasing,” said the study. “However, we find the opposite, namely that P2P file-sharing tends to increase rather than decrease music purchasing.”
The study angered the Canadian Record Industry Association (CRIA) which has fought a bitter battle to discredit, so far unsuccessfully, the study ever since.
Enter the latest and greatest attempt released by the Canadian Intellectual Property Council (CIPC) and entitled “The True Price of Peer to Peer File-Sharing.” Dr. George Barker, director for the Centre for Law and Economics at the Australian National University, took a “closer look” at the survey data gathered by Industry Canada and believes he has a different conclusion.
“Without access to peer to peer file-sharing, even the hardest core downloaders, the ones who normally don’t buy any legal music at all, say they would go legal—they would buy a third of the music they previously downloaded, from legal sources,” explains Barker. “That means that copyright reforms that reduce access to P2P sites would not only increase music sales, but would support artists and other professionals in the recording industry and boost government revenues as black market activities return to mainstream commerce.”
Barker concludes that P2P in fact “harms” legal music sales and, that if people no longer had access to it (?), 75% of illegal file-sharers would then purchase music legally. He says that “hardcore” downloaders who only use P2P to acquire music would legally purchase one third of their music if P2P were not available
First off, I’m not sure how he plans to remove P2P access entirely being that it’s most simplest form, email attachments, would prevail in all but the most draconian of legislative efforts.
Secondly, Birgitte Andersen, one of the co-authors of the original study Barker’s trying to debunk, has already discussed how P2P increases music purchases.
She divided the reasons for sharing music freely as follows:
• Market substitution effect: We found with statistically significance that people download some music freely as they are unwilling to pay.
• Market creation effect: In particular, we also found with statistically significance that people engage in P2P file-sharing because they explore, and this leads to subsequent purchases due to a ‘hear before buying’ effect.
• Market creation effect: Another statistically significant market creation effect is that people look for music which is ‘not available elsewhere’ (e.g. in the mainstream outlets) boosting new markets.
• Market segmentation effect: Another reason for people to engage in P2P file-sharing is that people are ‘wishing to not to buy ‘whole album’’, but prefer the single digital file.
“Overall, we found that the increase in music purchases of more active P2P file-sharers is explained by the fact that the significant ‘market creation effect’ of P2P file-sharing outweighs the significant ‘market substitution effect’, where people download music freely as they are unwilling to pay,” she wrote in a rebuttal last year.
Barker seems to be suffering from what Anderson called a “misguided obsession” on the substitution rate of P2P since he is clearly, as she puts it, “ignoring the market creation effect.”
Using his conclusion that three out of four people who download some or all of their music using P2P say they would purchase music if P2P were inaccessible, he goes on to claim that this translates into hundreds of millions of dollars of increased music sales.
There’s no mention of how he came to a different conclusion than that of Andersen and Frenz, but there appears to be no consideration of the “market creation effect” that Anderson speaks of. In fact, there’s no admission that P2P can have any positive effect whatsoever.