Study: File Sharing Leads To More, Not Fewer, Musical Hits Being Written

from the more-research-needed dept

As Techdirt has noted many times, much of the debate around filesharing is driven by dogma rather than data. That’s beginning to change, although there has been a natural tendency to concentrate on economic issues: that is, whether filesharing causes sales of music and films to drop or not. But copyright is not fundamentally about making money: it’s about encouraging creativity. So arguably a more important question to ask is: does filesharing harm or help creativity?

That’s precisely what an interesting new paper entitiled “Empirical Copyright: A Case Study of File Sharing and Music Output,” written by Glynn S. Lunney, Professor of Law at the Tulane University School of Law in New Orleans, seeks to explore (found via TorrentFreak.) Here’s the background:

From a utilitarian perspective, devising an optimal copyright regime requires a simple balancing of copyright’s benefits against its costs in order to maximize the resulting social welfare. While simple in theory, this balance has proven surprisingly difficult to achieve in practice. In part, this difficulty arises because the data available is inevitably limited, and often observational, and so the conclusions are fraught with ambiguity and uncertainty. In part, it arises because there are vested political interests that do not want an optimal copyright regime. Rather, they seek a copyright regime that maximizes their own welfare, whatever that may be. As a result, whatever data is available, and whatever uncertainty or ambiguity remains, they will twist in order to ensure that copyright serves them, rather than society as a whole. Whether due to the first problem or the second, there are also surprisingly few empirical studies of the costs and benefits associated with broadening or narrowing copyright. This study aims to help fill that gap by examining how file sharing has affected the creation and dissemination of new original music.

As Lunney notes, filesharing is a “natural experiment in radically reduced copyright protection,” and offers us the chance to explore whether that results in reduced creative output too, as maximalists like to claim. With the assumption that filesharing does cause a fall in revenue for artists (which may not, in fact, be true), there are two effects that need to be considered:

The first is familiar: Lower returns for creating music will lead to fewer new authors and artists, as lower returns lead individuals to devote their talents elsewhere in the economy. The second may be less familiar, but is no less real: Lower returns for any given work means that those individuals who do become authors or artists will, on average, each create more works.

The second of those may seem counter-intuitive, but is well established in economic theory:

when wages are low, an initial wage increase leads individuals to devote more time to working, as the higher wage leads individuals to substitute work for leisure (the “substitution” effect). As wages continue to rise, however, higher wages generate higher income, which leads in turn to increased demand for a variety of goods including leisure (the “income” effect). Once wages increase to the point where the desire for leisure from the income effect outweighs the desire for work from the substitution effect, further wage increases actually lead to less time spent on work. Economists refer to this as the backward-bending labor supply curve.

Here’s how that works out in the context of strengthening copyright:

Economic theory thus suggests that we should expect broader copyright to lead to more works from having more new authors, but at the potential cost of fewer works from our most popular existing authors. Narrowing copyright, on the other hand, whether through a formal statutory amendment or through an informal technological development such as the rise of file sharing, should have the opposite effect: fewer works from having fewer new authors or artists entering the field, but more works from our most popular existing authors.

Whether file sharing will lead to more or fewer works, on balance, then, depends on the relative magnitude of these two marginal effects.

The rest of the paper explains how Lunney went about gathering data to explore that balance, and the statistical analyses he applied. Here’s what he found:

While the sharp decline in revenue that paralleled the rise of file sharing is associated with a decrease in the number of new artists in the study’s sample of the top fifty each year, ceteris paribus, it is also associated with an increase in the average number of hits by each new artist who does make it, ceteris paribus. Moreover, because the latter effect outweighed the former, the decline in revenue since file sharing began was not associated with any decline in music output. To the contrary, the decline in revenue was associated with an increase in the number of new hit songs that appeared annually in the study’s sample of the top fifty, ceteris paribus.

This study therefore concludes that file sharing has not reduced the creation of new original music. It may have led to fewer works as a result of fewer new artists entering the field, but it was also associated with an increase in output by those artists who chose, despite the lower returns, to devote their talents to making music. Given that file sharing undeniably promotes the broad dissemination of existing works, this conclusion suggests that file sharing is both fully consonant with copyright’s constitutionally-delimited purposes and welfare enhancing. While the study has limitations, particularly those associated with the use of observational data generally, it nonetheless suggests that file sharing is not, for the music industry, at least, the problem that the copyright industries have claimed.

Fans of strong copyright enforcement will be uncomfortable with that result, and will doubtless find details of the author’s methodology to criticize. Lunney himself is aware of its limitations:

While the data represents the longest and most detailed study of file sharing’s impact on music output that I have seen, it still covers only twenty-nine years and one country.

More research on what has happened elsewhere around the world would of course be welcome. But the study is in any case valuable for highlighting that heated arguments about the effects of filesharing on the sales and profits of the copyright industries miss the point: ultimately what matters is the impact, if any, on creativity.

Follow me @glynmoody on Twitter or, and +glynmoody on Google+

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Comments on “Study: File Sharing Leads To More, Not Fewer, Musical Hits Being Written”

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ltlw0lf (profile) says:

Maximalist's agenda...

As Lunney notes, filesharing is a “natural experiment in radically reduced copyright protection,” and offers us the chance to explore whether that results in reduced creative output too, as maximalists like to claim.

Maximalists’ like to claim their are working to the benefit of the artist, but *every* action they champion helps the incumbent industry. But the maximalists’ will now claim that even if there is more quantity despite lower copyright protection, there is far less quality (because only Hollywood knows how to properly take Transformers 23 and turn it into an international blockbuster.) And quality is very important to a society that likes viewing the 15th million cat video on YouTube (guilty!)

If increased quality is their new goal, then they are going to have to deal with Michael Bay and the other producers/directors that consider rehashing the same special effects blockbusters and remaking the same story over and over again. (Not that I am against rehashing…I love the Sci-Fi version of Dune as much as I love the 1985 version, and rehashing can be done very effectively.)

It isn’t about the creativity of an artist, it is, and always has been, about control of something that cannot be naturally controlled (human creativity.) They would view less musical hits (that they control 100% of) as far more important than more musical hits (that they control significantly less than 100% of.)

Michael (profile) says:

Re: Maximalist's agenda...

And quality is very important to a society that likes viewing the 15th million cat video on YouTube (guilty!)

I agree with you, but it always bothers me when people use the cat videos and refers to quality of product. You wrongly noted that people often do not care about the quality of videos being produced. Who are you to judge the quality of cat videos over Hollywood films? Isn’t the real measuring stick for quality the number of people that liked something?

ltlw0lf (profile) says:

Re: Re: Maximalist's agenda...

You wrongly noted that people often do not care about the quality of videos being produced.

How so? Actually, I sarcastically said exactly the opposite. But only because it is part of a sub-genre of amateur videos. Usually done without big budgets, a lack of high-quality FMV cameras and post-processing and editing which make up a majority of the Hollywood produced videos. People don’t really care about the “quality” of the cat video, but care more about the completely unscripted and entirely natural actors.

I love cat videos and apparently so do my coworkers (if our network statistics are taken into consideration.) They usually have minimal “quality”, but they have the quality we care about. Many people like substance over sparkle.

Who are you to judge the quality of cat videos over Hollywood films?

I don’t. I am not a professional. I know very little about framing shots, or steadying the camera, or proper lighting and/or sound. That is my brother’s field of study, and he does a pretty good job at it (so I am told,) and can critique others on stuff like that. However, until we see awards ceremonies for cat videos, I suspect they will remain on the lower end of the quality scale in the eyes of the professionals.

Isn’t the real measuring stick for quality the number of people that liked something?

That is one measure of quality, though I don’t think very many professionals would agree. It certainly is a measure of popularity, but not necessarily quality.

jupiterkansas (profile) says:

If you compare the musical output of artists of today with those of the pre-copyright classical era, you’ll find that the classical composer put out music at a rate that puts even today’s most prolific artists to shame.

For example, Frank Zappa released around 60 CDs worth of music in his career, and he makes most of his contemporaries look bad. Philip Glass, whose career isn’t over, has released around 70 CDs of music.

However, Bach composed 155 CDs worth of music, Beethoven composed 85 CDs worth, and Mozart, who died when he was 35, composed 170 CDs worth of music. All of this before the Berne Convention.

To think that copyright enables artists to create more is ridiculous.

That One Guy (profile) says:

Re: Re: Patronage

Get rid of the parasites that claim ownership over the creator’s works, and drain the vast majority of the profits, and you could have a similar system today, though instead of a wealthy few patrons, you’d have bunches of people throwing out smaller amounts.

It may or may not add up to be enough to easily live off of, but historically the number of artists able to make a good living solely off of their works has been the definite minority anyway, so that wouldn’t be that different from how it’s always been.

PaulT (profile) says:

Re: Re: Re: Patronage

One of the wealthy patrons of today. Other business models and crowdfunding, etc. provide such patronage, even if they provide patronage from a large group of smaller patrons rather than a single large one. In fact, go to any article here about Kickstarter, especially in the early days, and you’ll see the usual suspects attacking the concept of crowdfunding as “nothing new” because it kind of resembles old school patronage.

Pragmatic says:

Re: Re: Patronage

Good point, @ John E. Miller. What you’re saying is, the artists weren’t being paid at a percentage of sales of copies or prospective sales of copies, but at a piece rate, i.e. per composition for their commissions.

They may have had profit-sharing deals with opera houses, etc., but in no way did copyright play a role in getting them paid.

It worked pretty well for them, so why not continue a good thing? As others have pointed out, crowdfunding, etc., can take the place of the wealthy patron.

That One Guy (profile) says:

Re: Parasites

Refuse to feed them long enough to bankrupt them. It’ll take a while, they’ve got their hooks into a whole lot, but if artists refuse to sign with them(and thereby sign their rights and creations to them), and customers refuse to buy from them, then eventually they’ll begin to feel the hurt.

At that point they either evolve into a more customer/creator friendly group, or they go out of business, either works.

Just Sayin' says:

Not all so obvious

First off, congrats on the story already covered and killed on Torrentfreak. it didn’t take long for the people there to point out a bunch of things.

I think foremost in all of this is that you can only support this answer if you don’t look at how much easier it is today to produce “content”. A recent report about Beyonce’s surprise album release talked about how she recorded 80 seperate tracks in a very short period of time, enough material for a half a dozen albums if she wants.

Also, the study tended to look at a small sliver of the industry and not the industry as a whole. While the top performers may be putting out more “content”, there is no indication that the industry as a whole is seeing any big surge.

You have to work hard to find any causal link between the activity and copyright. In fact, it would seem that much of the music created today is made specifically for the copyright world, so that the artists can license it for commercial and movie rights, not just for retail sale. More and more of the money made with music is in that vein, and depends entirely on copyright to function.

There is no causal link between copyright or lack thereof and creation of new content by top artists, at least none shown by this study.

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