File Sharing - Effects of File Sharing

Effects of File Sharing

According to David Glenn, writing in The Chronicle of Higher Education, "A majority of economic studies have concluded that file sharing hurts sales". A literature review by Professor Peter Tschmuck found 22 independent studies on the effects of music file sharing. "Of these 22 studies, 14 – roughly two-thirds – conclude that unauthorized downloads have a 'negative or even highly negative impact' on recorded music sales. Three of the studies found no significant impact while the remaining five found a positive impact."

A study by economists Felix Oberholzer-Gee and Koleman Strumpf in 2004 concluded that music file sharing's effect on sales was "statistically indistinguishable from zero". This research was disputed by other economists, most notably Stan Liebowitz, who said Oberholzer-Gee and Strumpf had made multiple assumptions about the music industry "that are just not correct." In June 2010, Billboard reported that Oberholzer-Gee and Strumpf had "changed their minds", now finding "no more than 20% of the recent decline in sales is due to sharing". However, citing Nielsen SoundScan as their source, the co-authors maintained that illegal downloading had not deterred people from being original. "In many creative industries, monetary incentives play a reduced role in motivating authors to remain creative. Data on the supply of new works are consistent with the argument that file sharing did not discourage authors and publishers. Since the advent of file sharing, the production of music, books, and movies has increased sharply." Glenn Peoples of Billboard disputed the underlying data, saying "SoundScan's number for new releases in any given year represents new commercial titles, not necessarily new creative works." The RIAA likewise responded that "new releases" and "new creative works" are two separate things. "his figure includes re-releases, new compilations of existing songs, and new digital-only versions of catalog albums. SoundScan has also steadily increased the number of retailers (especially non-traditional retailers) in their sample over the years, better capturing the number of new releases brought to market. What Oberholzer and Strumpf found was better ability to track new album releases, not greater incentive to create them."

A 2006 study prepared by Birgitte Andersen and Marion Frenz, published by Industry Canada, was "unable to discover any direct relationship between P2P file-sharing and CD purchases in Canada". The results of this survey were similarly criticized by academics and a subsequent revaluation of the same data by Dr. George R. Barker of the Australian National University reached the opposite conclusion. "In total, 75% of P2P downloaders responded that if P2P were not available they would have purchased either through paid sites only (9%), CDs only (17%) or through CDs and pay sites (49%). Only 25% of people say they would not have bought the music if it were not available on P2P for free. This clearly suggests P2P network availability is reducing music demand of 75% of music downloaders which is quite contrary to Andersen and Frenz's much published claim."