Friday, February 23, 2007

File sharing doesn't hurt music sales

A new study demonstrates statistically that the effect of file sharing on music sales is negligible, despite the recording industry's claims of staggering losses as a result of digital music swapping. This is the first hard evidence of my own long-held belief that attempting to restrict free exchange of copyrighted digital property (be it music or software) is not only ineffective, but in probably even counterproductive.

There has been a real drop in music sales in the last few years, a fact which the music industry has often pointed towards as proof of the impact of P2P file sharing. The author suggests several possible explanations of this trend, which are reasonable, although it does not attempt to analyze this side of the equation in detail.

There are other costs that are not even accounted for in this study. The entertainment industry has undoubtedly spent staggering sums of money on developing and implementing copy-protection schemes for music and video. This real cost is of course built into the price of every CD, DVD and DVD player you buy. Windows Vista includes DRM code at every layer of its functionality, at the behest of the entertainment industry. Every modern TV and DVD player must include circuitry whose only purpose is to manage encrypted digital information. All these technologies, which add no value to the consumer, impact the bottom line when you buy something -- and in some cases, the complexity of the technology causes things to just not work even when used in a perfectly legal manner.

Another consideration is that DRM reduces the value of music purchased online, by restricting its utility, which certainly has an effect on sales as well. Finally, the RIAA continues to file thousands of lawsuits on the basis of their so-called losses, again at great expense not just to the recording industry, but to society as these essentially frivolous suits must be brought to trial. This also comes back as a real cost; and since suing your own customers is akin to biting the hand that feeds you, there is certainly an impact from the ill will generated by these actions.

These other factors are probably difficult to quantify, but taken with the hard data presented in this study, it is clear that the ongoing fight against "piracy" of this kind is not just ineffective, but probably actually harmful to the industry. It will be a great day when the entertainment industry starts focusing it's resources on actually entertaining again.

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