New paper claims P2P has no significant effect on sales

A new paper in the Journal of Political Economy has fired the latest volley in the ongoing filesharing debate. The journal was established in 1892 by one of the most decorated Economics schools in the world,

The study compared a large sample of music downloads to American music sales data in order to search for a link between illicit downloading and album sales. Analyzing data from the final four months of 2002, the researchers estimated that P2P affected no more than 0.7% of sales.

The sample was extensive, covering some 1.75 million songs and 680 albums, They found that popular music will often have both high downloads and high sales figures, so what the researchers wanted was a way to test for effects on albums sales when file-sharing activity was increased on account of something other than US song popularity.

The authors conclude:

Using detailed records of transfers of digital music files, we find that file sharing has had no statistically significant effect on purchases of the average album in our sample. Even our most negative point estimate implies that a one-standard-deviation increase in file sharing reduces an album's weekly sales by a mere 368 copies, an effect that is too small to be statistically distinguishable from zero.

The findings are notable, because the shed some doubt on the claims of the RIAA that file sharing had resulted in a 10% drop in sales in 2002.

That said, it should be clear that this study does not imply that file sharing has no effect on labels. Many independent labels have been forced to reduce their workforce dramatically in the past few years, suggesting that there are certainly other factors involved and does not address the fact that different genres may see disparate effects from file sharing.

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