Downloading and the effect on the market

[BeautifulBurnout]

Interesting article that I read in today's La Liberation led me to this study by the Canadian Intellectual Property Policy Directorate which confirms two important points: illegal downloading appears to have neither a positive nor negative effect on overall CD sales; and people who download are actually likely to buy more CDs than average.

Extract:

The primary objective of this paper is to determine the effects of P2P file-sharing on purchases of CDs and electronically-delivered music tracks, using representative survey data from the Canadian population.
In the aggregate, we are unable to discover any direct relationship between P2P file-sharing and CD purchases in Canada. The analysis of the entire Canadian population does not uncover either a positive or negative relationship between the number of files downloaded from P2P networks and CDs purchased. That is, we find no direct evidence to suggest that the net effect of P2P file-sharing on CD purchasing is either positive or negative for Canada as a whole. These inferences are based on the results obtained from estimation of the negative binomial models (Table 4.1 and Appendix 4).


However, our analysis of the Canadian P2P file-sharing subpopulation suggests that there is a strong positive relationship between P2P file-sharing and CD purchasing. That is, among Canadians actually engaged in it, P2P file-sharing increases CD purchasing. We estimate that the effect of one additional P2P download per month is to increase music purchasing by 0.44 CDs per year (based on estimates obtained from the negative binomial model in Table 4.3). Furthermore, we find indirect evidence of the 'market creation' effect of P2P file-sharing in the positive coefficient on the variable 'Not available elsewhere' (Table 4.3).

So, downloaders buy more music!

[Sean]

Pretty funny to think that the big lables cracking down on illegal file-sharing may actually be shooting themselves in the foot by alienating their most active customers.

[34958hq439-qjw9v5jq298v5j]

It was once said that file sharing was the greatest marketing tool to have ever existed. I know that there are those who will download instead of buying, but I've always felt that filesharing probably would end up increasing sales since Kid A, which famously leaked on Napster long before the release date, debuted at #1. I think it gave a lot of people who had only heard of Radiohead the chance to actually hear the music, propelling a very non-pop album to the top of the charts.