The Impact of Music Downloads and P2P File-Sharing: Summary of findings

[SUBMAN1]

Hmm - these guys seem just like me for some odd reason! They don't care to have MP3's DL'd off the inet, but would instead rather have the source material and actually go out and buy a CD where they otherwise would not! Imagine that RIAA! I have bought more music from things I have listened to online, than anything I ever heard on the radio!

-S

The Impact of Music Downloads and P2P File-Sharing: Summary of findings

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).


In the aggregate, we find mixed evidence on the relationship between P2P file-sharing and purchases of electronically-delivered music tracks in Canada (Table 4.2 and Appendix 5). Furthermore, our analysis of the Canadian P2P file-sharing subpopulation does not uncover any relationship between P2P file-sharing and the purchasing of electronically-delivered music files. These inferences are based on the results obtained from our Probit and Logit estimations (Table 4.4). It is difficult to conclude what is the net effect of P2P file-sharing on purchases of electronically-delivered music.


With respect to the influence of price on CD purchasing, we are unable to find any direct relationship between the respondents' reported average CD price and CD purchases in Canada (Table 4.3 and Appendix 4). However, we find some indirect evidence that price influences CD purchasing, as the variable capturing the motivation to engage in P2P file-sharing because of the perception that CDs were too costly was negatively associated with CD purchases.


This result is in line with the arguments put forward by Liebowitz (2005), Zentner (2004), Rob and Waldfogel (2004).


Another important finding is that the overall results show that people who purchase paid electronically-delivered music are not less likely to purchase music in traditional markets (CD albums). However, people who also own an MP3 player appear to be less likely to purchase CD albums.


Furthermore, there is a strong evidence that people who buy a high number of DVDs, videogames, cinema tickets and concert tickets also purchase a higher number of CD albums. The same is the case if we view the P2P file-sharers in isolation. These results also hold for paid electronically-delivered music, although only for purchases of cinema tickets. As mentioned in Section 4, this complementary effect of entertainment goods also supports the findings and arguments put forward by Liebowitz (2005), but the results of this Canadian study differ from the findings of Peitz and Waelbroeck (2004) and McKie (2006), which suggest that entertainment goods are substitutes. Our results suggest that people who are interested in entertainment goods (such as music) are also interested in DVDs, concerts, cinema/movies and video games. Thus, music and other entertainment goods are not substitutes; instead the relationship is linked to a life-style choice of certain groups of society.


We find that income has no statistically significant effect on CD or paid electronically-delivered music purchasing. We, therefore, conclude that music purchasing in general takes up too low a share of peoples' income to have any effect on purchasing behaviour. This result on the Canadian population does not support the findings of Liebowitz (2005) and Peitz and Waelbroeck (2004) who analyzed the relationship between income and CD sales.


Regarding music taste, we find that people who declare that they have a 'very strong interest' or 'somewhat strong interest' in music compared with people who declared that they had a 'very low interest' in music purchased significantly more CD albums. Furthermore, our results based on the analysis of the entire population show that Canadians who perceived an increase in music quality reported increased purchases of paid electronically-delivered music files; and, P2P file-sharers who reported a perceived drop in the quality of music, purchased fewer paid electronically-delivered music tracks. Thus, music interest and the perception of music quality seem to be positively related to music purchasing.


Overall, our demographic variables show some indication of a digital-divide in Canada with respect to Internet skills, age and region of residence. Greater Internet skills and younger age groups were associated with increased music purchases from Internet pay-sites. These findings are in line with the arguments of Castells (2001) and the survey by Decima Research (2005). However, there is no digital-divide with respect to gender and Canadian females are relatively active music downloaders of paid electronically-delivered music tracks.

http://strategis.ic.gc.ca/epic/site/.../ip01462e.html

[Reaves]

I'd agree that it helps sell CD's.


I never watched Band of Brothers when it was on TV (I don't watch TV at set times every week) but I did stream it online most likely illegally.

I have since gone on to purchase the entire box set. I can guarentee 100% that would not have happened if I were not able to watch the series over the internet first.

[P_Funk]

The other thing that is always assumed about P2Ping is that if I downloaded it I would have bought it. So if I pick up that free newspaper and read it that means I'd pay a buck fifty for the same paper?

I have downloaded some bad games that I would have insisted on a refund for if I'd have been stupid enough to buy them.

[Skybird]

Musdicians today mostly agree that they cannot survive anymore if depending on CD sales alone. They simply sell too few. Some companies don't see it as a lucrartive market anymore. The past three year in Germany for example have seen a very massive shift towards live concerts. that is because legal download numbers outclassed CD sales, but illegal downloads were higher than legal ones, so live concerts were the only rral deal option left. In GHermany, and I have the impression throughout europe, the touring and concert business is booming.

Some days agi, BBC world reported oin a band named Radiohead, I do not know them, but it seems that they first said in Octobre to let the fans decide the pörice for their latest album. Some days ago now, BBC reported that apparently only 15% of the customers downloading it - actually payed any money at all.