The Effect of File Sharing on Record Sales: An Empirical Analysis

This study has been kept away from the mainstream for some time now. It is published in the Journal of Political Economy based in the University of Chicago, and has been shedding light on a topic conveniently assumed to be as simple as an evil vs. good battle.

The article has resurfaced on technology related sites including slashdot.org arstechnica.com, and tech.netscape.com among others.

The Federal Trade Comission used this study in their 2004 conferences titled "Peer-to-Peer File-Sharing Technology: Consumer Protection and Competition Issues." Check out some of the other presentations and make your own judgement in which direction the FTC is 'leaning' the research.

Abstract:

For industries ranging from software to pharmaceuticals and entertainment, there is an intense debate about the appropriate level of protection for intellectual property. The Internet provides a natural crucible to assess the implications of reduced protection because it drastically lowers the cost of copying information. In this paper, we analyze whether file sharing has reduced the legal sales of music. While this question is receiving considerable attention in academia, industry, and Congress, we are the first to study the phenomenon employing data on actual downloads of music files. We match an extensive sample of downloads to U.S. sales data for a large number of albums. To establish causality, we instrument for downloads using data on international school holidays. Downloads have an effect on sales that is statistically indistinguishable from zero. Our estimates are inconsistent with claims that file sharing is the primary reason for the decline in music sales during our study period.

Quote:

"With no clear theoretical prediction, the effect of file sharing on sales is an empirical question. Most of what we know about the effects of file sharing is based on surveys. The evidence is mixed. File sharers generally acknowledge both sales displacement and learning effects, and it is unclear if either effect dominates."

Vanity Fair presents: Pirates of the Multiplex

Vanity Fair has provided quite an insightful current events article in the war between Big Media and The Pirate Bay. Illegal media downloads have been the hot topic for some time now, yet this article manages to refresh the current state and update with interesting tangents. Here are some quotes:

Pirates of the Multiplex

One person who is relishing the idea of asymmetrical warfare with the M.P.A.A.
is Pirate Bureau chief Rasmus Fleischer. "Mark Getty [the photo-archive mogul] said that intellectual property is 'the oil of the 21st century'—and oil apparently means war," states Fleischer. "Copyright is so incompatible with so many cultural and technological developments. This is going to be a growing
problem for years ahead."

"The modern M.P.A.A., as if to prove itself capable of a more nuanced approach to the file-sharing threat, recently collaborated with the Boy Scouts of America, who are now offering a merit badge for anti-piracy activities. "

Among the few senior entertainment executives who have been able to absorb this seemingly basic aspect of human nature is Anne Sweeney, president of DisneyABC Television. In her keynote speech at the October 2006 MIPCOM audiovisualcontent market in Cannes, France, Sweeney broke ranks with her boardroom peers to make a bracingly pragmatic statement. "Piracy is a business model," Sweeney said. "It exists to serve a need in the market—consumers who want TV content on demand. And piracy competes for consumers the same way we do: through quality, price, and availability."

And now that iTunes has leveled the distribution playing field to the great disadvantage of major labels, Birgersson poses the question "What do you need these multi-billion-dollar companies with all their skyscrapers for? We shouldn't sacrifice a lot of these gains to prolong that system for another few years."

Sweden's "Broadband Jesus" appears to be suggesting that the sun is setting
on the era in which Ben Affleck got paid $15 million for Paycheck.