How File-Sharing Affects Album Sales (c. 2008)

Billboard:

In a study called "Purchase, Pirate, Publicize: The Effect of File Sharing on Album Sales," Jonathan Lee of Queen’s University in Ontario monitored both the sales and pirated downloads of 2,251 albums... from 2008. (For some perspective, that's the same year that Spotify arrived in the U.S.) Legitimate album sales data came from Nielsen SoundScan, while file sharing stats were pulled from a BitTorrent tracker. "From the results, I conclude that file sharing activity has a statistically significant but economically modest negative effect on legitimate music sales," he writes.

He added, "But the results can also inform business and policy decisions in the market for music and for other media as well. Trade groups such as the Recording Industry Association of America (RIAA) and the International Federation of the Phonographic Industry (IFPI) spend considerable effort and resources to deter piracy and shut down file sharing networks like the one studied in this paper. If the effect of file sharing on sales is small, this expense may not be worth it. The results of this paper should help to inform such cost–benefit analysis by trade groups, law enforcement agencies, and policymakers."


TorrentFreak:

One of the downsides is that the data itself is relatively old, from 2008, and the music industry has changed a lot since then. This means that the results may have been different today. Also, it’s worth noting that the download numbers come from a BitTorrent tracker that counts a relatively high share of music aficionados. They may also act differently than the general file-sharer.


Complete Music Update:

{According to the study,} while file-sharing activity had a negative impact on CD sales, the word-of-mouth marketing power of the file-sharing community actually aided legit download sales. Perhaps suggesting that file-sharers were quick to shun physical products as file-sharing became an option, but they nevertheless used the file-sharing networks – to an extent at least – as a try-before-you-buy platform.

Lee adds that the extent to which the marketing power of file-sharing offset lost CD sales varied according to the level of artists, with “bottom tier” acts losing out the most. Though, the researcher ponders that this might be because their music wasn’t as attractive to file-sharers who were trying before they buy, i.e. the music itself was the problem.

As for what all this tells us about today, the report focuses on data that pre-dates the big shift of digital consumption from downloads to streams, so mainly identifies trends occurring in a specific moment of time. Though, given the disparity in ‘is file-sharing good or bad for music?’ reports over the years, it’s good to see one that acknowledges both outcomes and tries to balance one off another.