P2P, Online File-Sharing, and the Music Industry

R. Pollock, P2P, Online File-Sharing, and the Music Industry, TheFactz, 10 November 2005

Analysising five empirical studies relating to the loss of CD sales at the hands of P2P Pollock finds: "online illegal file-sharing does have a negative impact on traditional sales. The size of this effect is debated, and ranges from 0 to 100% of the sales decline in recent years, but a figure of between 20 and 40% would be a reasonable consensus value (i.e. that file-sharing accounted for 20-40% of the decline in sales not a 20-40% decline in sales).

Beyond this basic result several other very interesting facts have emerged. First is the differential impact of file-sharing on an artist depending on their existing popularity. According to Blackburn who investigates this issue the 'bottom' 3/4 of artists sell more as a consequence of file-sharing while the top 1/4 sell less. Second is the first tentative estimates (by Waldfogel and Rob) of the welfare consequences of file-sharing. Waldfogel and Rob's dramatic result is that file-sharing on average yields a gain to society three times the loss to the music industry in lost sales."