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March 30, 2004 2:23 PM   Subscribe

 
they concluded that file sharing actually increases CD sales for hot albums that sell more than 600,000 copies

So out of all of the CDs that are released in a given year, what percentage of them sell more than 600K copies, and what is the net result of those CDs that don't sell that many for whatever reason?

This seems like a rather poor "study".
posted by milnak at 2:28 PM on March 30, 2004


no way would i have bought the Darkness cd if someone hadnt had "shared" with me the entire disc.

now i have not only bought a copy for myself and several of my closest friends but i have tickets to the show in san diego.

musicians should consider cds as something more than just this one simple unit of saleable product. it is also a way to get people to go to their $30-a-head show.

and from my rather poor study, the artist gets a way bigger cut from ticket sales than record sales.
posted by tsarfan at 3:00 PM on March 30, 2004




The band Wilco talks about how releasing their music online helped their CD sales but also greatly increased their live show turnout.

The key desire for musicians is to have their music heard by as many people as possible (with the hope that people pay for it). The internet is the best promotional device ever built. Wilco plays up the promotion angle greatly in the interview.
posted by mathowie at 3:07 PM on March 30, 2004


You can read the full paper here and the press release is here.
posted by Marquis at 3:20 PM on March 30, 2004


In making its case, the Recording Industry Association of America (RIAA) points to data showing that CD sales fell from a high of more than $13.2 billion in 2000 to $11.2 billion in 2003 -- a period that matches the growth of various online music piracy services.

Also a period that matches a rather sizeable economic recession and increased unemployment. But that's just a coincidence, I guess.
posted by RylandDotNet at 3:32 PM on March 30, 2004


So everything I learned in kindergarten is true! Sharing is good!
posted by strangeleftydoublethink at 3:40 PM on March 30, 2004


there's also a discussion at copyfight which is my favorite source for this sort of news.

piracy of the "social" sort (for lack of a better word) doesn't cause a significant loss of revenue. for instance the No Electronic Theft Act which went after "collectors" of cracked and hacked software was drafted, enacted, and prosecuted precisely because no-one could demonstrate economic loss, but they wanted to get those bad guys anyway.
posted by crush-onastick at 3:43 PM on March 30, 2004


So out of all of the CDs that are released in a given year, what percentage of them sell more than 600K copies, and what is the net result of those CDs that don't sell that many for whatever reason?

From the study:

"Our estimates indicate that less popular artists who sell few albums are most likely to be negatively affected by file sharing. (Note, however, that even for this group the estimated effect is statistically insignificant.)"
posted by scottandrew at 3:52 PM on March 30, 2004


Just what we all knew all along. Being able to sample music means that you are pretty likely to end up buying that music if you like it. If you didn't like it then no worries, delete the MP3 and move on.

I'm sure some fat cat lawyer for the RIAA is trying to figure out what the sales WOULD have been without the downloaders screwing up all the metrics. And then I'm sure they will to sue someone for their "lost revenue" even though they haven't really lost anything, except every single shred of good will the music industry ever had. But hey, good will doesn't show up on a business ledger, does it? Neither do happy employees either but I go to CostCo and not WalMart for a reason.
posted by fenriq at 5:00 PM on March 30, 2004


Just what we all knew all along. Being able to sample music means that you are pretty likely to end up buying that music if you like it. If you didn't like it then no worries, delete the MP3 and move on.

And here's where the argument falls short, IMHO. Just about any online music retailer lets you sample tracks from almost any (even obscure) CDs. Why do you need to download an MP3 to "sample" music?

I imagine that if the record companies said that you could download DRMed music files (play a few times on one computer) to "sample" the CD, you people would complain equally loud.
posted by milnak at 6:06 PM on March 30, 2004


This isn't news, and I'm sure the RIAA were the first to figure this out years ago... they may be evil, but they're not stupid. The real reason they're trying to shut down piracy, of course, is so they can maintain their monopoly on music distribution. If they can't put the lid on this before artists wise up and bypass traditional record labels, then they're in trouble.

So what's going to happen without labels? All record labels really do is provide an interest-free loan to the band to cover the recording costs and free marketing, in exchange for almost all of the profits from record sales. This is more attractive to struggling artists than simply getting a loan from the bank and hiring a PR firm because there's no up-front cost involved. Can we work a new system out before P2P is criminalized? C'mon mefites, you're smart people!
posted by Eamon at 6:17 PM on March 30, 2004


Following from what Eamon said, what I found most useful from the article was in the References pages of the article: namely, the citation that pointed to Steve Albini's cogent critique of the music industry. Albini's screed can be found here, and explains better than anything else I've read to date just how awful major labels can be to small bands. [warning: it's Steve Albini. Expect cuss words.]
posted by .kobayashi. at 7:46 PM on March 30, 2004


Eamon, I see where you are coming from, but I always like to play devil's advocate =)

How exactly does the record label industry form a monopoly over music distribution? Artists are free to share their music if they deem that the marketing route they'd like to pursue (of course, as long as they aren't "enslaved" by one of the evil corporate record labels). If record labels want to assume that file-sharing hurts sales, let them see the reality of it if you feel so strongly that it does not. If the file-sharing does in fact increase sales, or as this study suggests does not effect sales, then where is the harm done?

And that leads me to refute the argument against "evil corporate labels" (shoot me):

what percentage of people are willing to take the risk of quitting their jobs (i.e., lose a certain level of income security) to which they are supposedly "enslaved" to open their own business and sell their labor independently? Wilco exemplifies that artists can be successful (assumedly a rather subjective term in the realm of artists, no?) using file-sharing to support record sales, but how many artists would take up the opportunity to obtain a contract to get paid to make music while someone else assumes all of the risk involved? I mean, what exactly is the present value of each route taking into account the risks, startup costs, opportunity costs, desire for fame, desire for money, other psychological factors, etc.? It seems obvious that the decision to sign a contract with a major label isn't purely a financial decision to artists. So why must we feel bad for them when they decide to sell their intellectual property rights to the big labels?

Just something to think about... I am honestly still pretty split up on the issue.

and what milnak said.
posted by methree at 8:48 PM on March 30, 2004


If the file-sharing does in fact increase sales, or as this study suggests does not effect sales, then where is the harm done?

Again, I believe that the record labels are afraid that the short-term increase in record sales can eventually lead to the destruction of their entire industry. They were probably the first to know that P2P wasn't hurting sales, so why else would they fight it? It's all about control.

...how many artists would take up the opportunity to obtain a contract to get paid to make music while someone else assumes all of the risk involved?

This is exactly my second point. I realize that record labels serve a useful purpose, but I also believe that the balance of power has tipped too far in their favor. I don't have a solution: the question I posed was genuine. I'm leaning toward non-profit co-ops, but I haven't really thought out the details.

Does the system really need to be changed in the first place? I think it does: in its mad grab for absolute control of "their" IP, the entertainment industry is pushing hard for legislation that erodes our freedom of speech and right to privacy.
posted by Eamon at 9:12 PM on March 30, 2004


As much as I might believe in what the study says it proves, it can't prove it.

The authors state that albums which see large amounts of sharing on OpenNap do not seem to have their sales affected by the sharing, by showing that albums which are shared heavily show no decline in sales.

Unfortunately, that doesn't prove their case. All it shows is that Album A sells 100 copies and is shared heavily. Maybe without it being shared, it would have sold 150 copies, or 50 copies. Without a control - for instance, finding that Album B, which *isn't* shared and is very similar to Album A, sells more or less copies - there is no way to prove this argument either way.
posted by humuhumu at 12:07 AM on March 31, 2004


'"collectors" of cracked and hacked software'

Oh fuck. They have a name for me now? I don't buy albums because when I buy concert tickets the artist makes much, much more money than buying their album from a corporate sponsor. That excuse not good enough for you? Fine. Blind yourself to the obvious truth that artists are constantly ripped off by record companies. Corporate crooks get respect, I steal a few hundred albums on my shoestring budget and im a thief.
posted by Keyser Soze at 4:46 AM on March 31, 2004


Humuhumu, you summed up my concerns about the study (and I'm someone who is deeply involved in both the independent media movements and the exercise of using the web to develop fandom, which makes me a sympathetic ear to emotional argument.) Correlation is not causation without a good control to compare too.

The scarier thing for me was their observation, however "statistically insignificant" it might be, that album with smaller sales (many of which represent these very same independents) might be the ones most affected by file-sharing. That would depressing to think about if you subscribed to a "zero sum game" theory of economics (which I don't.)

But at least Britney can sleep well tonight knowing that the P2Ping of her music isn't going to affect her advertising-driven album sales. /shrug
posted by bclark at 5:25 AM on March 31, 2004


The thing I found most interesting about the article was the assertion that people who had been file-sharing for more the 6 months were likely to go back to buying music, and buy more. That jibes nicely with what I know from anecdotal evidence from various friends. You start engaging in P2P and spent a few months just rolling in all the cool stuff that you've found and listening to some portion of it. Then you decide what you really like and go out and buy that in a better quality, more convenient format.
posted by jacquilynne at 5:30 AM on March 31, 2004


"How exactly does the record label industry form a monopoly over music distribution?

While alternate distribution options are available, and certainly can be effective to a point, being on a major label opens doors that are otherwise closed to the independent artist. This is due to the close ties established between the recording industry and these major avenues of distribution.

"...but how many artists would take up the opportunity to obtain a contract to get paid to make music while someone else assumes all of the risk involved? I mean, what exactly is the present value of each route taking into account the risks, startup costs, opportunity costs, desire for fame, desire for money, other psychological factors, etc.?"

I have to first ask what do you think you know about the industry? Do you know that most contracts stipulate that the label will recoup startup costs and advances from gross sales before the artist ever sees penny one? Do you know how many band's releases get shelved as tax write-offs for the label and never get released because the label now owns the rights to the music? Do you know how long it can take to get a record released without the artist receiving income? Do you know how many bands and musicians work day-jobs to keep themselves afloat while they wait for their album to be released? Do you know how long they have to continue to keep that day-job until the record has made enough money to pay back the record company's costs and start putting money in the artist's pocket? Do you know how much of that money is split between managers, lawyers, crew, etc.? Yes, the label takes a risk with each artist it signs. A monetary risk that they may or may not recoup. But that is the business they are in. The artist's risk signing with that label is that the label may not handle or market him/her/them properly and therefore the artist will not reach the widest possible audience and will not see the best monetary return for 'his' art. So this is the joint venture that artist and label enter into together, hoping for the best possible outcome.

"It seems obvious that the decision to sign a contract with a major label isn't purely a financial decision to artists. So why must we feel bad for them when they decide to sell their intellectual property rights to the big labels?"

It isn't purely a financial decision. Though the lines have blurred over what one label can provide over another. However enslavement enters into it because there is no reason that artists should have to sell their art/intellectual property to the label. The label has avenues to recoup costs, or write-off costs if an artist/album doesn't do well.

Similarly, a writer goes to a publisher to market his book. He does not sell the rights to his book to the publisher in order to market it, he enters into an agreement whereby he gives the publisher the rights to publish it. And the writer can go to a different publisher if he wishes to market his book at the end of his term with his previous publisher if he is unhappy or for whatever reason he chooses. Publisher and artist share a percentage of the profits, but in this scenario, the rights to the book rightfully stay with the writer, not the publisher.

"Just something to think about... I am honestly still pretty split up on the issue."

So go think about it some more, and come back when you know a bit more about what you are talking about.
posted by mikhail at 10:37 AM on March 31, 2004


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