[x-pubpol] BitTorrent Piracy Boosts Music Sales, Study Finds

[Joly MacFie]

http://torrentfreak.com/bittorrent-piracy-boosts-music-sales-study-finds-120517/

A new academic paper
http://www.scribd.com/doc/93891327/Hammond-File-Sharing-Leak by a
researcher from the North Carolina State University has examined the link
between BitTorrent downloads and music album sales. Contrary to what’s
often claimed by the major record labels, the paper concludes that there is
absolutely no evidence that unauthorized downloads negatively impact sales.
Instead, the research finds that more piracy directly leads to more album
sales.

[image: casette]For more than a decade researchers have been looking into
the effects of music piracy on the revenues of the record industry, with
mixed results.

None of these researchers, however, used a large sample of accurate
download statistics from a BitTorrent tracker to examine this topic. This
missing element motivated economist Robert
Hammond<http://www4.ncsu.edu/~rghammon/>,
Assistant Professor at North Carolina State University, to conduct his own
research.

In a paper titled<http://www.scribd.com/doc/93891327/Hammond-File-Sharing-Leak>
“Profit
Leak? Pre-Release File Sharing and the Music Industry” Hammond published
his findings.

Between May 2010 and January 2011 the professor collected a variety of
download statistics of new albums that were released on the largest private
BitTorrent tracker dedicated to music. He then used this data in
combination with sales numbers to construct a model that predicts what the
causal effect of piracy on music sales is.

The results are unique in its kind and reveal that BitTorrent piracy causes
an increase in album sales.

“I isolate the causal effect of file sharing of an album on its sales by
exploiting exogenous variation in how widely available the album was prior
to its official release date. *The findings suggest that file sharing of an
album benefits its sales.* I don’t find any evidence of a negative effect
in any specification, using any instrument,” Hammond concludes in his paper.

In total the sample includes 1,095 albums from 1,075 artists. The research
focuses on albums that leaked before their official release. The music
industry often states that “curbing pre-release piracy is a particular
priority for the recording industry.” These releases are also the focus of
criminal proceedings against pirate sites both in the US and the UK.

However, according to the research, sales may actually be hurt by going
after these sites. Hammond’s findings suggest that piracy itself acts as a
form of advertising similar to radio play and media campaigns, where more
downloads result in a moderate increase in sales.

That said, the effect described in the paper is a moderate one. Taking all
factors into account Hammond finds that an album that leaks a month in
advance results in 59.6 additional sales.

To some degree the results are surprising, as other studies have found a
negative relation between music piracy and sales. However, Hammond notes
that none of these studies had access to such detailed and precise download
statistics which make it possible to go beyond the usual correlation.

Also, unlike several other studies, Hammond’s focuses on album releases
instead of single songs.

“I focus on how file sharing of an individual album helps or hurts that
album’s sales. The question of interest here is whether an individual
artist should expect her sales to decline given wider pre-release
availability of the album in file-sharing networks. I find that the answer
is no.”

Another unique finding reported in the paper is that popular artists profit
more from piracy than less established acts. For smaller artists there is
no effect of pre-release piracy on sales. This contradicts older research.
Hammond, however, notes that his data is richer than in the other studies,
and therefore more accurate.

In addition, we’d argue that the focus on pre-releases may also account for
the missing effect on new artists.

While the reported data appears to be solid, the question has to be asked
how representative the data set is for all music piracy on BitTorrent. The
private tracker in question has more than 150,000 users, who are almost
exclusively more than average music fans.

Overall, the paper offers a unique and unprecedented analysis of BitTorrent
piracy on music sales. It clearly disputes the music industry argument that
pre-release piracy hurts album sales, and suggests that BitTorrent piracy
can act as promotion.

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