Peer-To-Peer Didn’t Kill Record Biz

Think of file sharing, and you’re more than likely to contemplate all the damage it’s done to artists and the recording industry.

A recent report from the London School of Economics has set out to challenge this belief and prove that outside forces have had a part in the downturn of the music business and technology could in fact be the industry’s savior.

Bart Cammaerts and Bingchun Meng of LSE’s Department of Media Studies acknowledge that recorded music sales have declined over the past decade – from $26 billion in 2000 to $16 billion in 2010 – but they also contend that the focus on peer-to-peer sharing in the UK’s Digital Economy Act is misguided.

“First, the music industry is performing better than is being claimed and declining sales can be explained by other factors in addition to illegal filesharing,” they wrote. “Second, the negative framing of the debate about file-sharing and copyright protection threatens to stifle the very same creative industry the [DEA] aims to stimulate.”

One major factor in the decline includes the gradual weakening of the economy as “the downward pressure on leisure expenditure is likely to continue to increase due to rising costs of living and unemployment and drastic rises in the costs of (public) services.”

With household budgets dwindling, competition for spending on culture and entertainment has also increased, they say. This is evidenced by a 2004 U.S. Consumer Expenditure survey, which showed that CD sales dropped over a 10-year period by 43 percent for people who didn’t even own computers and weren’t likely to use peer-to-peer networks.

The authors also note that claims about “piracy and revenue losses are often based on the wishful thinking of rights holders,” who often assume that people who download music would actually purchase the material if file-sharing was effectively controlled.

A 2007 study in the Journal of Political Economy apparently found otherwise, explaining that “while downloads occur on a vast scale, most users are likely individuals who in the absence of file sharing would not have bought the music they downloaded.”

So how exactly are artists making money? Touring is of course a large part of it. Cammaerts and Meng note that in 2009, revenues from live music outperformed recorded music in the UK for the first time. They also found that global sales of digital music are on the rise and new models, including licensed streaming sites, have helped to cut down on peer-to-peer sharing.

However, the authors also suggest that the DEA is flawed in characterizing file-sharing as merely a piracy and a threat, and should instead acknowledge that it is “a lawful activity and is often used to share content that creators make freely available and to drive innovation in the sector.”

Such an outlook has been taken by some artists in the music industry, who are “making full use of file-sharing and the participatory culture it sustains rather than rejecting it,” the authors say, using innovative models such as publishing music exclusively online or promoting music sampling through downloading, which can spur sales.

“By embracing the online participatory culture, (some) artists are developing close relationships with their fans by connecting with the innovative potential of this vibrant participatory culture,” they write. “Positive experience online promotes brand recognition, notoriety and fame which draw potential music buyers to concerts.”