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Research paper finds music piracy ‘benefits’ album sales

By Stephen C. Webster
Friday, May 18, 2012 14:09 EDT
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Metallica drummer Lars Ulrich. Photo: Ferenc Szelepcsenyi / Shutterstock.com.
 
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Illegally downloading pre-release leaks of major artists’ albums actually “benefits” first week sales, and if used properly these types of leaks could even work as an effective promotional tool for the largest record labels going forward, according to findings in the first draft of a working paper put out this month by an assistant professor at North Carolina State University.

However, the study (PDF) is not necessarily the godsent revelation advocates of file sharing and copyright reform may have been hoping for. Speaking to Raw Story on Friday, Asst. Prof. Robert Hammond, a Ph.D. graduate of Vanderbilt, cautioned that his results should not be construed to contradict the economic analyses put forward by music industry lobbyists in discussions with lawmakers.

Nevertheless, his study does pack a punch: “The findings suggest that file sharing of an album benefits it’s sales. I don’t find any evidence of a negative effect [from piracy] in any specification, using any instrument,” he wrote.

In fact, his study found that effect goes in the opposite direction: Hammond noted that the sales-boosting effect of piracy was most pronounced in cases where a major band’s album had been leaked online ahead of the official release. However, the overall amplification effect was relatively small, producing about 60 additional purchases in cases where an album was leaked to pirates up to 30 days before its official release.

“My results suggest that it’s possible to think of leaks as promotional activity, but more work needs to be done to understand how general that result is,” he told Raw Story.

He also noted that download data he used came from a “very small” BitTorrent tracker, and that the sales boosting effects could be more pronounced if data from some of the larger trackers were examined. Despite the size of his download tracker, Hammond told Raw Story that it actually offered him more detailed data than any other prior studies on the subject, revealing a previously unidentified correlation between downloads and sales.

Cross referencing that download data with music industry sales figures, Hammond was able to pinpoint key similarities. Namely, major bands are always downloaded the most, and they almost always see the biggest sales. Hammond found that these artists also saw the greatest benefit from pre-release file sharing. While that benefit may be relatively small, the popularity trend carried over to the genre level, with with pop albums seeing the greatest benefit, whereas independent artists or newly released groups saw none.

But that’s where the good news for copyright reform advocates ends: “What I find are individual downloads of an individual album are not harmful to individual sales,” he said. “That does not imply that if we aggregate all the downloading and all the sales, that more downloading, for the industry, means more sales for the industry.”

Hammond continued: “So much of the [recent] failed [Internet] legislation was driven by lobbying activities at the industry level. Nothing in my paper says those lobbyists and those industry level organizations are wrong in their claims. There has certainly been a steep drop in profitability in that industry. My results are on a very different question and so my ability to inform policy in that regard is somewhat limited.”

That steep drop-off in profitability remains a prescient reality for record companies even despite the emergence of online services like iTunes and Spotify, which have seen subscription numbers soar in recent years. Even in countries like France, where U.S.-supported Internet restrictions have significantly cut down on piracy, the music industry’s profits have continued to shrink year to year.

Explaining that the “appropriate” role of copyright is not a topic he’d care to address, Hammond added that his study simply does not speak to the “industry-level question” of piracy’s potential harms. However, he noted that “individual authors who’ve looked at the economics question [of piracy] find that file sharing is bad.”

Some of those industry analyses, however, seem to inflate the overall damages of piracy by attributing direct losses per download, as if to assume that the downloader would have otherwise purchased the item that is being shared with them. Rob Reid, creator of the online music service Rhapsody, explained in March during a speech to TED Talks why this is actually rather absurd.

“These days, an iPod classic can hold 40,000 songs… Which is to say, eight billion dollars worth of stolen media, or about 75,000 jobs,” Reid said. “Now you might find copyright math strange, but that’s because it’s a field that’s best left to experts.”

“So, putting my work in that context says that what’s good for an individual artist seems to be very different than what’s good for the industry,” Hammond concluded. “I imagine policy makers are more concerned with the industry than the individual artists.”
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Photo: Metallica drummer Lars Ulrich, who filed the first lawsuit against music sharing service Napster in 2000. Ferenc Szelepcsenyi / Shutterstock.com.

(H/T: Torrent Freak)

Stephen C. Webster
Stephen C. Webster
Stephen C. Webster is the senior editor of Raw Story, and is based out of Austin, Texas. He previously worked as the associate editor of The Lone Star Iconoclast in Crawford, Texas, where he covered state politics and the peace movement’s resurgence at the start of the Iraq war. Webster has also contributed to publications such as True/Slant, Austin Monthly, The Dallas Business Journal, The Dallas Morning News, Fort Worth Weekly, The News Connection and others. Follow him on Twitter at @StephenCWebster.
 
 
 
 
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