Impact of Downloads on Music Sales?
Study by Harvard and UNC Says Zero

In the past few weeks there have been some mixed developments in the recording industry's battle against illegal file sharing. On the legal front, the industry began a new round of international lawsuits against foreign file sharers. A misguided new bill authorizing civil charges in file-sharing cases is making its way through the Senate, and a bill criminalizing copyright violations over peer-to-peer networks has been passed out of committee in the House. The Justice Department has established an Intellectual Property Task Force to look at ways to crack down on violations. Meanwhile, a Canadian judge has refused to force Internet providers to give up the addresses of file sharers. His ruling effectively makes the sharing of music files legal in Canada.

But this isn't just a legal battle, of course. It's a battle of information and ideas. A new book from Lawrence Lessig called "Free Culture" makes a forceful, cogent defense of many forms of file sharing. And - perhaps worst of all from the industry's perspective - a new academic study prepared by professors at Harvard and the University of North Carolina concludes, "Downloads have an effect on sales which is statistically indistinguishable from zero." This directly counters recording industry claims that place nearly all the blame for declining CD sales on illegal file sharing.

Without condoning the theft of intellectual property or the violation of copyright, it's still possible to find a great deal of common sense in Mr. Lessig's arguments in favor of balancing "the protection of the law against the strong public interest that innovation continue." As it stands, the position of the recording industry and its ally, the movie industry, is simply to shut down innovation. That is the clear purpose of the file-sharing bills pending in Congress. That has been the entertainment industry's reaction to all new distribution technologies since Thomas Edison.

But the recording industry's interests are not synonymous with the public interest. The industry assumes that the main reason people engage in file sharing is simply to get free music. For many people, certainly, that is its main appeal. But file sharing - like the new generation of legal music-downloading services, including Apple's wildly successful iTunes Music Store - is also a direct response to a number of unpleasant realities in the music business. As long as the recording industry lives and dies by the blockbuster, music listeners will be looking for ways to see deeper into the music catalog. For some listeners, file sharing has become a way to experiment - to try out new music without first shelling out $16 or $17 for a CD. There was a time when radio gave listeners a chance to hear lots of new music. Thanks to conglomerates like Clear Channel, those days are dead.

The recording industry needs to catch up to music lovers, and soon. Punitive tactics protect the industry's legal rights, but by themselves do not address its deeper problems. Some recording companies have realized this and begun to use file-sharing data, which offers an immediate reading on consumer interest, to hone their marketing. One or two companies have even begun to post paid versions of songs on file-swapping networks simply for exposure. The industry's tactics in the battle against file sharing look to many people - including many artists - less like an effort to protect copyright and more like an attempt to continue the industry's control over the distribution of music. The resources of the industry could be better spent if, as the authors of that recent study suggest, it is waging war against a financially negligible problem.

© 2004 NY Times

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