Lies, damned lies and statistics

The recent ruling by the Federal Court of Canada — that music fans who download music for personal use via peer-to-peer (P2P) services are not breaking its local copyright law — highlights the risk the music business is taking in deciding to sue music file-sharers.

Add to that the fact that research from the Harvard Business School contradicts the record industry’s central claim that file-sharing via such services seriously damages record sales, and you start to get a sense of the huge task facing the industry.

But the International Federation of Phonographic Industries (Ifpi) and its British sister body BPI are both taking this challenge to music fans outside the United States. The Ifpi is suing 247 fans in Canada, Denmark, Germany and Italy for online piracy, while the BPI is sending out messages across P2P sites warning fans to stop illegal activity or face the legal consequences.

When it comes to figures on how record sales have been reduced by illegal downloading it has always been a case of lies, damned lies and statistics. The music industry is convinced that since the early days of the original Napster it has lost revenue.
But the research from Harvard and the University of North Carolina says that file-sharing helps music sales. The authors, Felix Oberholzer-Gee and Koleman Strumpf, conclude that file-sharing had no effect on the sale of popular CDs in the second half of 2002.

They go on to say that for the top 25% of albums (with sales of more than 600 000 copies) they found a positive effect: 150 downloads were said to increase sales by one copy.

Jay Berman, chairperson and CEO of Ifpi, is scornful of the research, pointing out that it was carried out in the record industry’s traditionally strong second half of the year — when Christmas boosts sales.

“If I listened to that study my business would have improved,” he says. The one thing he agrees with in the report is that tracks from the most popular albums are most likely to be downloaded. For Berman, this explains a worrying trend, which has seen a “substantial” fall in the number of albums sold by the biggest artists.

But Wayne Rosso, chairperson of the US-based lobbying body P2P United and CEO of Optisoft, supports the Harvard research and claims that despite legal action in the US, P2P traffic numbers have remained healthy.

“The recording industry is so completely misguided in its use of fear tactics that it can only engender even more contempt from fans. And what’s even more ridiculous is that they’re all profitable and their business is up, in part due to the free marketing they get from P2P networks.”

The artists, too, are not so certain that the stats being bandied about by the record companies stand up to scrutiny. Dave Rowntree, the drummer of Blur, told the industry weekly New Media Age he was furious that the BPI was threatening to sue music fans for online piracy. He wondered how the researchers could know for certain if people spent less money on CDs because they downloaded music.

The BPI study found that eight million people in the United Kingdom download music, with 92% of them doing so illegally. The study also claimed that downloaders spent 32% less on albums and 59% less on singles than before they started downloading.

Interestingly, the new paid-for Napster’s internal figures show that the biggest purchasers of downloads to burn on to CDs via its on-demand service are the same people who pay $10 a month to listen to as much music as they like via its streaming service.

Napster is reluctant to say that this supports the claim that access to music via P2P services could boost record sales, but a spokesperson accepts that “people given a wide access to songs are more likely to buy than others’‘. — Â

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