Take That, MPAA

[Super Dude]

So it turns out file-sharing may in fact increase music sales, a study at a North Carolina university finds:

A new academic paper by a researcher from the North Carolina State University has examined the link between BitTorrent downloads and music album sales. Contrary to what’s often claimed by the major record labels, the paper concludes that there is absolutely no evidence that unauthorized downloads negatively impact sales. Instead, the research finds that more piracy directly leads to more album sales.

For more than a decade researchers have been looking into the effects of music piracy on the revenues of the record industry, with mixed results.

None of these researchers, however, used a large sample of accurate download statistics from a BitTorrent tracker to examine this topic. This missing element motivated economist Robert Hammond, Assistant Professor at North Carolina State University, to conduct his own research.

In a paper titled “Profit Leak? Pre-Release File Sharing and the Music Industry” Hammond published his findings.

Between May 2010 and January 2011 the professor collected a variety of download statistics of new albums that were released on the largest private BitTorrent tracker dedicated to music. He then used this data in combination with sales numbers to construct a model that predicts what the causal effect of piracy on music sales is.

The results are unique in its kind and reveal that BitTorrent piracy causes an increase in album sales.

“I isolate the causal effect of file sharing of an album on its sales by exploiting exogenous variation in how widely available the album was prior to its official release date. The findings suggest that file sharing of an album benefits its sales. I don’t find any evidence of a negative effect in any specification, using any instrument,” Hammond concludes in his paper.

In total the sample includes 1,095 albums from 1,075 artists. The research focuses on albums that leaked before their official release. The music industry often states that “curbing pre-release piracy is a particular priority for the recording industry.” These releases are also the focus of criminal proceedings against pirate sites both in the US and the UK.

However, according to the research, sales may actually be hurt by going after these sites. Hammond’s findings suggest that piracy itself acts as a form of advertising similar to radio play and media campaigns, where more downloads result in a moderate increase in sales.

That said, the effect described in the paper is a moderate one. Taking all factors into account Hammond finds that an album that leaks a month in advance results in 59.6 additional sales.

To some degree the results are surprising, as other studies have found a negative relation between music piracy and sales. However, Hammond notes that none of these studies had access to such detailed and precise download statistics which make it possible to go beyond the usual correlation.

Also, unlike several other studies, Hammond’s focuses on album releases instead of single songs.

“I focus on how file sharing of an individual album helps or hurts that album’s sales. The question of interest here is whether an individual artist should expect her sales to decline given wider pre-release availability of the album in file-sharing networks. I find that the answer is no.”

Another unique finding reported in the paper is that popular artists profit more from piracy than less established acts. For smaller artists there is no effect of pre-release piracy on sales. This contradicts older research. Hammond, however, notes that his data is richer than in the other studies, and therefore more accurate.

In addition, we’d argue that the focus on pre-releases may also account for the missing effect on new artists.

While the reported data appears to be solid, the question has to be asked how representative the data set is for all music piracy on BitTorrent. The private tracker in question has more than 150,000 users, who are almost exclusively more than average music fans.

Overall, the paper offers a unique and unprecedented analysis of BitTorrent piracy on music sales. It clearly disputes the music industry argument that pre-release piracy hurts album sales, and suggests that BitTorrent piracy can act as promotion.

says: It really helps when someone other that the MPAA or RIAA undertakes a piracy study, doesn't it?

https://torrentfreak.com/bittorrent-piracy-boosts-music-sales-study-finds-120517/

[skydivingninja]

Cool find!  NC State is 15 minutes away from me, too.  So go Raleigh!

[hefdaddy42]

This is what I've suspected all along.

I think if there is an area where illegal downloading actually IS preventing actual sales, it is in back catalogs, not new releases.

[Orbert]

Interesting, and not surprising.

It really helps when someone other that the MPAA or RIAA undertakes a piracy study, doesn't it?

Most definitely.

[kirksnosehair]

Yep, music sales have been skyrocketing!

[j]

Yep, music sales have been skyrocketing!

The OP made no such claim.  Changes in total music sales is a completely different and much more complex issue.

-J

[lordxizor]

Free internet radio, Pandora, being able to download a single song instead of an album, and many other reasons have contributed to the decline of album sales.

[Super Dude]

Also, as mentioned, this sort of data should be expected from the RIAA, who benefit from the existence of such myths revolving around piracy.

[eric42434224]

Free internet radio, Pandora, being able to download a single song instead of an album, and many other reasons have contributed to the decline of album sales.

And shitty music.   

[TL]

Piracy has never been a big factor in declining music sales. For many less mainstream bands and artists, file sharing has actually helped them out. It has always just been a convenient scapegoat for an extremely out of touch industry.

Music sales overall have declined, largely for two reasons, both relating to the RIAA's bread and butter, Top 40;

They aren't putting out worthwhile material, and with the internet, they no longer have control over what people have access to, and what people are exposed to.

People no longer have to buy an entire album to get one or two catchy singles. This isn't a problem for bands who have been making records full of great material anyway, but for a lot of Top 40 acts, this is basically the death of their business model. No one is going to pay $20 for an album if they can get the only good songs from it legally for two or three dollars.

[AcidLameLTE]

Also, you'd be surprised at just how many people only listen to music on YouTube.

[TL]

Also, you'd be surprised at just how many people only listen to music on YouTube.

I'm guessing people who do this though wouldn't be buying a whole lot of music in the first place, and wouldn't really be straying outside the Top 40 model if youtube and downloading weren't options.

[Nekov]

People no longer have to buy an entire album to get one or two catchy singles. This isn't a problem for bands who have been making records full of great material anyway, but for a lot of Top 40 acts, this is basically the death of their business model. No one is going to pay $20 for an album if they can get the only good songs from it legally for two or three dollars.

I think this is the main reason. With mainstream music it happens a lot that bands have one or two hit singles that everyone wants to listen to. Back in the day you had to buy the whole album but now you can buy single songs.
I do think Piracy has an impact on album sales, but nowhere near where the MPAA and RIAA want people to believe.

[kirksnosehair]

Piracy has never been a big factor in declining music sales.

 

[Orbert]

It's listening habits and how people obtain music in general that have changed.  Why buy it at all if you can just click on the YouTube video and listen to and/or watch it?

[TL]

Piracy has never been a big factor in declining music sales.

 

Oh, with that well stated argument, obviously I'm going to change my mind.

Seriously though, the only part of the industry that has been significantly hurt by piracy was already operating on an extremely shifty business model. Yes, maybe I overstated it there, but if you read the entire post, you'll know what I meant by that. Bands that put out entire albums worth of solid material haven't really been effected, and some have actually seen their sales increase over the past 10-15 years. The only major drop has been Top 40 artists who can no longer sell a $20 album because of two or three tracks. Services like iTunes and legal streaming sites have more to do with that than piracy these days.

There's also simply more competition. Decades ago, people were only exposed to so much music. Now, a person could be buying the same number of albums, but some might be for independent acts, or bands in other countries, whose sales aren't tracked by the RIAA.

[kirksnosehair]

Believe me, I've heard all of the rationalizations for theft arguments about how downloading is helping artists before.   It's not true, and it won't be true, no matter how many times you say it is.

And now I'm done with this, because I know it's a waste of time.

Edit:  THIS DUDE really articulates my position on this issue better than I ever could.

[Ben_Jamin]

One reason we all need to support local music. That's how all bands start out anyways.

[Scheavo]

Believe me, I've heard all of the rationalizations for theft arguments about how downloading is helping artists before.   It's not true, and it won't be true, no matter how many times you say it is.

Ya know, this statement would make much more sense... if it wasn't in a thread about a study saying the exact opposite of what you're saying.

You're basically employing the post hoc fallacy. Record sales have declined since the advent of the internet, the internet brought piracy, therefor piracy is causing that decline in record sales. But, as people have shown, there are other ways to explain this decline that don't rely purely upon internet piracy. The internet is cretainly involved, but you need proof to say that it is piracy specifically.

[TL]

Believe me, I've heard all of the rationalizations for theft arguments about how downloading is helping artists before.   It's not true, and it won't be true, no matter how many times you say it is.

And now I'm done with this, because I know it's a waste of time.

Edit:  THIS DUDE really articulates my position on this issue better than I ever could.

You know, you're not right about this just because you say you are.

Yes, piracy has possibly had a negative effect on Top 40 acts that were working on a faulty business model anyway. At this point though, being able to stream on legal services, or being able to buy single tracks on iTunes, is far more damaging to those types.

File sharing and just the internet in general has been extremely beneficial to a LOT of artists. Heck, look at Dream Theater's album sales. In the decade of 2000-2009, when piracy was at its peak, their albums were selling more and more copies with each release. They're not the exception here either.

On a semi-related note, one of the biggest factors that has caused a decline in record sales in the mainstream is increased competition. Say there's a certain span of time in which I'd typically buy 10 albums. Back in the 80s, I would only be exposed to so many acts, all of which would have their album sales tracked by the RIAA. In their eyes, that's 10 sales. Now, fast forward to the present. Say I'm buying just as many albums. Some may be from independent bands. Some may be directly from the source (like Burning Shed for Porcupine Tree). Some may be from foreign countries that aren't tracked by my country's industry. In all of these cases, I'm buying albums, which I probably wouldn't have heard of pre-internet, and which aren't counted by the RIAA. In this hypothetical, I just bought 10 albums, with money going to the artists, but the RIAA counts it as zero because they didn't get their cut.

[snapple]

There is a lot of reasons that deal with why record sales are down. Saying piracy is actually helpful to record sales is like nailing jelly to a wall. However, to blame piracy entirely for the decline of record sales is equally stupid.

[XJDenton]

That and increased competition from other forms of media. The video game market was negligible at the start of the 90s, now worth about 17 billion. Considering that people have finite entertainment budgets, I dont think its unreasonable that that growth has come at the expense of some of the music sales. Same argument applies to home video and DVD.

[Scheavo]

Saying piracy is actually helpful to record sales is like nailing jelly to a wall.

Again, this would make sense, if it weren't in a thread about a study saying the exact opposite. You can make this claim, but in order for it to be true, it has to be backed up by the data.

Many things which would seem like common sense, are not actually true, when you delve into them scientifically.

[hefdaddy42]

People no longer have to buy an entire album to get one or two catchy singles. This isn't a problem for bands who have been making records full of great material anyway, but for a lot of Top 40 acts, this is basically the death of their business model. No one is going to pay $20 for an album if they can get the only good songs from it legally for two or three dollars.

I think this is the main reason. With mainstream music it happens a lot that bands have one or two hit singles that everyone wants to listen to. Back in the day you had to buy the whole album but now you can buy single songs.

What are you guys talking about?  You could ALWAYS buys the singles.  That's why they are called singles.

There have always been 45s, or cassette singles, or CD singles, and now individual songs on mp3.  It's the same as it ever was.

People have NEVER had to buy the album to get the single.

[ariich]

That and increased competition from other forms of media. The video game market was negligible at the start of the 90s, now worth about 17 billion. Considering that people have finite entertainment budgets, I dont think its unreasonable that that growth has come at the expense of some of the music sales. Same argument applies to home video and DVD.

THIS, SO MUCH THIS.

I completely agree with Scheavo on the post-hoc fallacy as well. The internet was invented. Total value of music sales have dropped. Therefore, the internet destroyed music sales. It completely ignores a whole host of other factors. Unfortunately the public and media in general are very bad at understanding how to interpret statistics.

[ariich]

People no longer have to buy an entire album to get one or two catchy singles. This isn't a problem for bands who have been making records full of great material anyway, but for a lot of Top 40 acts, this is basically the death of their business model. No one is going to pay $20 for an album if they can get the only good songs from it legally for two or three dollars.

I think this is the main reason. With mainstream music it happens a lot that bands have one or two hit singles that everyone wants to listen to. Back in the day you had to buy the whole album but now you can buy single songs.

What are you guys talking about?  You could ALWAYS buys the singles.  That's why they are called singles.

There have always been 45s, or cassette singles, or CD singles, and now individual songs on mp3.  It's the same as it ever was.

People have NEVER had to buy the album to get the single.

While this is true, those singles were still massively profitable for the industry. Singles were, what, maybe £2-3? And if you wanted both good songs from an album, then you're pushing up to £5-6. And you'd be paying that much to get a couple of other songs that you didn't want. Whereas now, I would imagine the area that has suffered most from online music (be that illegal downloading, legal streaming, or buying the songs individually for 79 pence/cents) is those singles sales, or the album sales that would have occurred because it was better value than buying two singles.

[kári]

The private tracker in question has more than 150,000 users, who are almost exclusively more than average music fans.

Great site BTW!

[hefdaddy42]

People no longer have to buy an entire album to get one or two catchy singles. This isn't a problem for bands who have been making records full of great material anyway, but for a lot of Top 40 acts, this is basically the death of their business model. No one is going to pay $20 for an album if they can get the only good songs from it legally for two or three dollars.

I think this is the main reason. With mainstream music it happens a lot that bands have one or two hit singles that everyone wants to listen to. Back in the day you had to buy the whole album but now you can buy single songs.

What are you guys talking about?  You could ALWAYS buys the singles.  That's why they are called singles.

There have always been 45s, or cassette singles, or CD singles, and now individual songs on mp3.  It's the same as it ever was.

People have NEVER had to buy the album to get the single.

While this is true, those singles were still massively profitable for the industry. Singles were, what, maybe £2-3? And if you wanted both good songs from an album, then you're pushing up to £5-6. And you'd be paying that much to get a couple of other songs that you didn't want. Whereas now, I would imagine the area that has suffered most from online music (be that illegal downloading, legal streaming, or buying the songs individually for 79 pence/cents) is those singles sales, or the album sales that would have occurred because it was better value than buying two singles.

I don't know about your poundages, but they were cheap enough that buying two singles was cheaper than buying the album, which would make it worth it to buy the singles if the rest of the album sucks.  Which is frequently the case.

[ariich]

Oh yeah absolutely, but I meant that people would still be paying more than half the cost of the album, to only get two songs that they actually wanted, for example. Whereas even with legal digital downloads you can download only the two songs you want for much cheaper.

[hefdaddy42]

Well, I wasn't saying that it wasn't cheaper now.  I was just refuting the people who say this is some new option with the dawn of the internet, which is clearly not true.

[XJDenton]

You can however choose any songs on the album, rather than just the ones released as singles.

[hefdaddy42]

You can however choose any songs on the album, rather than just the ones released as singles.

True, and this is a great option for album-oriented artists.  But for Top 40 or Pop artists, the best songs were always the singles anyway, so it didn't matter.

[Super Dude]

Saying piracy is actually helpful to record sales is like nailing jelly to a wall.

Again, this would make sense, if it weren't in a thread about a study saying the exact opposite. You can make this claim, but in order for it to be true, it has to be backed up by the data.

Many things which would seem like common sense, are not actually true, when you delve into them scientifically.

Kinda like climate change denial, eh?