perfidy

Back when I worked in the music biz, we used to joke when times got desperate. Toward the end of my time at one company, when it was clear that the revenue stream had become a brackish drip, the marketing people came up with a bunch of naked pleas we thought would be funny to use as marketing taglines: "Wave/Particle Records: Catalog Sales Are Down." "Wave/Particle Records: Hey... We Gotta Eat Too."

The companies I worked for were not, and never will be, big-time labels with multiple chart topping releases. When the entire music industry suffered at the dawn of the new millennium, we suffered too. Broadly speaking, when industry-wide sales were off 11% one year to another, we could count on a dip too. It never seemed right to me to blame downloading for our woes. It stands to reason that the most-downloaded tracks, and therefore the albums most ostensibly affected by the loss of revenue that downloading might suggest, are blockbusters, not critical darlings or cult hits selling fewer than 50,000 copies (that's three orders of MAGNITUDE lower than a big #1 hit record sells). The records I worked were obscurities, not teenybopper rages, and even if they were being downloaded, it was not at any appreciable clip. And yet, everyone's sales dipped in lockstep.

(Interesting side note... it's actually a little disheartening to log on to KaZaA looking to see if anyone is sharing copies of the record you just spent six months working on, only to find that nobody is.)

Now there's actual Facts and Research to back up my gut hunch about downloads. A new working paper from two professors of business, titled "The Effect of File Sharing on Record Sales,' has concluded that "downloads have an effect on sales which is statistically indistinguishable from zero, despite rather precise estimates."

Professors Koleman Strumpf and Felix Oberholzer-Gee took a 17-week sampling of downloads made from the major filesharing networks, corrected for a galaxy of variables, and mapped the popularity of downloads to the Billboard sales charts and SoundScan data for a given week. Their findings: in the worst cases, downloading may cannibalize one in every 500 record sales, and for most releases it's more like 1 in 5000. Not exactly the stuff of industry holocausts.Although I'm not much of econometrician, and can't speak to the math, their conclusions are sound and reasonable based on the methods they used.

Predictibly, the RIAA is firing back (see this NY Times piece). Unfortunately for them, they're bad shots, pooh-poohing the notion that statistical sampling can be an accurate indicator of an entire population. Unfortunately for us, most people don't know or understand that.

Amy Weiss, an industry spokeswoman, expressed incredulity at what she deemed an "incomprehensible" study, and she ridiculed the notion that a relatively small sample of downloads could shed light on the universe of activity.

The industry response, titled "Downloading Hurts Sales," concludes: "If file sharing has no negative impact on the purchasing patterns of the top selling records, how do you account for the fact that, according to SoundScan, the decrease of Top 10 selling albums in each of the last four years is: 2000, 60 million units; 2001, 40 million units; 2002, 34 million units; 2003, 33 million units?"

Critics of the industry's stance have long suggested that other factors might be contributing to the drop in sales, including a slow economy, fewer new releases and a consolidation of radio networks that has resulted in less variety on the airwaves. Some market experts have also suggested that record sales in the 1990's might have been abnormally high as people bought CD's to replace their vinyl record collections.

That last bit there is the nut of the matter. The 1990s were the decade in which the first and possibly the last generation to treat recorded music as a major entertainment commodity went back to buy all the Beatles and Stones albums on CD. While they were at the store, maybe they stuck around to pick up the Stone Roses too. Those days are gone, and the that one change, along with other certain structural changes in how records are distributed, have hosed the deal for good.

The Times article makes another good point. Each album downloaded doesn't necessarily represent a lost sale. The burns I have in my collection are of records that I wasn't going to buy anyway, at any price.

Go read the paper-- it's long and mathy, but I can't find much to complain about. The numbers are there. Downloading represents a continued consumer interest in music, and if the labels cannot understand the difference between paying $0 for an album and paying $18, tough. The RIAA are a bunch of dupes, and it's too bad for them they, and the labels they purport to represent, can't understand that demand is not a given, profits are not a right, and that if they shit their own bed, it's they who have to sleep there.