Drop In P2P File Sharing Due To Limewire Shutdown A Pyrrhic Victory For The Recording Industry

Overhype

from the all-those-interested-people...-gone dept

A whole bunch of folks have been submitting NPD’s latest report, which notes an apparently large dropoff in P2P file sharing in the fourth quarter, which it attributes to the closure of Limewire. I had hesitated to get into this, because NPD’s numbers and analysis have historically been suspect, so I always take anything that comes from them with a pretty large grain of salt. They also work for the usual suspects, calling into question some of their objectivity.

And, indeed, there are certainly some questions about the accuracy of the report, which involves self-reported user surveys — generally not the most reliable method of getting accurate data on something like file sharing (especially in the wake of something being shut down for being “illegal.”) That said, the numbers are big enough that even if they’re a bit off, it certainly does suggest something happened, and just to be nice, I’ll even grant the basic premise that file sharing in the US slowed down when Limewire shut down. Limewire historically has been popular, though not with the more technically savvy folks, but with a more general crowd, who tended to treat it much more like radio than as a way to “obtain” music.

But here’s the big question: assuming we accept this massive dropoff in P2P file sharing, was there a corresponding jump in music sales?

I am pretty sure that we won’t see a corresponding giant leap in music sales for the same quarter. And that’s kind of the point that we’ve been making all along. For all this talk of enforcement, why can’t anyone provide any evidence that it actually leads people to go back to buying stuff? In the case of Limewire, since most users didn’t really look at it as a replacement for sales, but as a replacement for radio, it’s not likely that they’re suddenly going to run to start paying. Instead, they’ll switch to other options, whether it’s YouTube, Pandora, GrooveShark or something else. If Spotify were actually available in the US, I would bet that it would sop up many ex-Limewire users.

And that’s really the major point here. Rather than seeing this decrease as a “victory” for the RIAA (as some have suggested), it highlights what an astounding lost opportunity it has been. Limewire, whatever its faults, was very eager to work with the recording industry to monetize the massive user base it had. And the record labels refused, just as they refused to negotiate with Napster a decade ago (something many in the industry now claim to regret — despite the fact that they’ve done it again and again and again). So rather than taking that opportunity, it’s been squandered. Similarly, if the record labels got their act together, services like Spotify would have launched in the US long ago. But the labels keep demanding more and more ridiculous conditions on the deal, and thus, the people go elsewhere… often to places where the labels won’t get paid at all.

This is what happens when you mistakenly think that the thing to focus on is stopping infringement rather than making more money. It’s the “but… but… piracy” argument all over again, where people get so focused on that, they forget the endgame. So, sure, the shuttering of Limewire may have stopped people from using P2P to obtain files. But will it actually get people to buy? Unlikely. And that’s a massive squandered opportunity.

Filed Under: file sharing, opportunities, us
Companies: limewire, npd