Study: Piracy can generate digital music sales

MUSO’s report that music piracy grew globally by 16.5% in the second half of 2015 – as reported in TMN last Friday – put the focus back on the effect of piracy on digital music sales.

Various research done in the past ten years are divided if piracy ruins sales or provides free promotion.

The latest academic study, published by the Economics Department of Queen’s University, suggests that piracy affects physical sales through file sharing but not necessarily digital ones which are generated by word of mouth – and it varies depending on the popularity of the artist.

Researcher Jonathan Lee’s paper Purchase, Pirate, Publicize: The Effect Of File Sharing On Album Sales analysed 250,000 albums and 4.8 million downloads from a popular BitTorrent tracker.

Lee writes, “From the results, I conclude that file sharing activity has a statistically significant but economically modest negative effect on legitimate music sales.”

His report suggests that major artists may benefit from piracy. “Top-tier artists lose sales, but the loss is partially offset by an increase in digital sales and the overall effect is small,” he said.

But lesser known musicians are hurt the most, with Lee opining that their work is not good enough to benefit from word of mouth. “Mid-tier artists are helped slightly and bottom-tier artists are significantly hurt by file sharing, which could indicate that file sharing helps lesser-known artists only if they are actually talented,” he wrote.

The study is here.

A 2013 study by the London School of Economics contended that copyright infringement might actually be helping boost revenues, despite claims by copyright owners. It cited how the music industry, worth almost US$60 billion in 2011, increased the year after, with 34% of revenue from digital channels as streaming and downloads. “Despite the Motion Picture Association of America’s claim that online piracy is devastating the movie industry, Hollywood achieved record-breaking global box office revenues of $35 billion in 2012, a 6% increase over 2011,” the report said.

As reported in TMN, the MUSO study found that Australians avidly infringe copyright online. Last October, Australians visited the most popular 18 piracy domains more than 16 million times. It was the worst culprit in the world for downloading Game Of Thrones last year. In October 2015 piracy sites like The Pirate Bay and Torrentz.Eu received 5.2 million visits from Australian audiences.