by Timothy Lee

Filed Under:
riaa, strategy


Report Suggests RIAA's Lawsuit-Happy Strategy Still Not Working

from the creativity-needed dept

Marginal Revolution links to a new paper by economist Stan Liebowitz on the economic effects of file sharing on the recording industry. It's a response to an earlier paper that argued peer-to-peer file sharing has had little impact on CD sales. Leibowitz digs into the arguments and finds a number of problems. For example, one of the arguments in the original paper depends on the assumption that college kids use peer-to-peer networks less during the summer than during the school year. Unfortunately, Liebowitz presents data suggesting that's not true: in two of the three years they studied, file-sharing activity was actually slightly higher in the summer than the rest of the year. Liebowitz also faults the authors for failing to release their full datasets; he says he was unable to replicate several of their results using publicly available data. In the end, Liebowitz makes a pretty convincing case that file-sharing technologies are hurting the recording industry: industry revenues in the United States fell by a third from 1999 to 2005. Of course, Liebowitz's data also suggests that the RIAA's current strategy of suing everyone in sight—which they launched in 2003—isn't working so well either: revenues continued to fall between 2003 and 2005. They've tried suing technologists and suing customers, and neither has saved them. Maybe it's time they tried some more creative approaches that don't involve hiring lots of lawyers.

It's also worth noting that neither study looks at trends in the overall music industry, which includes not just CD sales but concerts, T-shirt sales, sponsorship contracts, musical instruments, music lessons, and so forth. These are all important part of the music industry, and some of them have been doing quite well lately. As people use peer-to-peer networks to discover more music they love, they're likely to be inspired to spend more money on these other music-related products and services. As long as plenty of good music is being created and listened to, then the copyright system is working the way it's supposed to, even if the people who ship little plastic discs around the country aren't making as much money as they used to.

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  • identicon
    Shay, 28 Sep 2007 @ 6:26pm

    iTunes, etc

    Couldn't iTunes, etc simply account for some lost CD sales? I know I don't buy CDs at all any more. I get music on iTunes and Rhapsody since I don't like having to store the physical CDs.

    reply to this | link to this | view in chronology ]

  • identicon
    Tim Lee, 28 Sep 2007 @ 8:49pm

    Legal downloads are included in the data sets used in both papers.

    reply to this | link to this | view in chronology ]

  • identicon
    tony, 29 Sep 2007 @ 1:17am

    This just highlights that in fact illegal file sharing 'may' be a bad thing. DRM & suing everyone in sight and not adapting to the present is not the answer for the RIAA though.

    reply to this | link to this | view in chronology ]

  • identicon
    Drew Robertson, 29 Sep 2007 @ 6:25pm


    This is as good a place as any to ask you folks to fill out our survey.
    If you read the questions you'll figure out our agenda way before Q10
    Thanks if you fill it out

    reply to this | link to this | view in chronology ]

  • identicon
    Oliver Widder, 30 Sep 2007 @ 9:19am

    Sued Out

    Let's see how long it will take until the US is sued out.
    See my small cartoon


    reply to this | link to this | view in chronology ]

  • identicon
    Donald Jessop, 1 Oct 2007 @ 2:00pm

    Other reasons

    Unfortunately Stan Liebowitz couldn't take into account more subjective data: the music industry has been pumping out bad music for a long time and it is getting progressively worse. Instead he chose to look at P2P and music sales.

    Video game sales have been increasing over the past few years. Have they been increasing at the same rate as music sales? What about the total entertainemnt dollars being spent in any particualr year? Has it fallen with CD sales or has it steadily risen, indicating that people are moving away from music and to something else? And while legal downloads are included, each sale of a single on iTunes means a loss of an album sale. (Many bands are one hit wonders, so he needs the rest of the album?) Was this factored in?

    Stan Liebowitz has been promoting the idea that file sharing is harmful to the music industry for years so it is no wonder that he revisted the topic.

    Their is no way to come up with a definitive answer to the question because of the variables involved. Unless there is a parallel universe where P2P was never invented, we will never know the "truth". Instead of blaming P2P, which may or may not be a contributing factor, learn to exploit it.

    reply to this | link to this | view in chronology ]

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