Study Defends Music Sharing

Students who swap music files on the internet need not worry about starving their favorite artists, according to a recent study co-authored by professors at the Harvard Business School (HBS) and the University of North Carolina (UNC), Chapel Hill.

Associate Professor at HBS Felix Oberholzer-Gee and Associate Professor Koleman Strumpf at UNC tracked downloads of songs from specific albums on the OpenNap file-sharing network, and then compared this data with the weekly sales figures to see if downloading actually hurt music sales.

The researchers found that “[d]ownloads have an effect on sales which is statistically indistinguishable from zero, despite rather precise estimates,” according to a draft of the study released last week.

Even the worst-case statistical model suggests that it takes 5,000 downloads to reduce records sales by even one, according to the authors. For the most popular albums, every 150 downloads actually results in an additional album sale.

Harvard, like many universities, has been under pressure from the Recording Industry Association of America (RIAA) to crack down on students who use their network connection to download music. Last April, then-Dean of the College Harry R. Lewis ’68 announced that the College would unplug the connection of any users caught sharing copyrighted songs.

But this study suggests a new way of thinking about the costs and benefits of music file-sharing for both consumers and the industry.

“Maybe the Internet is really like the radio,” said Oberholzer-Gee, where being able to hear songs for free does not lead to an overall decrease in album sales.

The study was unique because it tracked exactly what was being downloaded as opposed to previous file-sharing research, which focused largely on data from surveys of internet users, according to Oberholzer-Gee.

The study’s conclusion contradicts many of these earlier surveys, which attributed some of the recent decline in record sales to the increase in illegal music downloading. According to the RIAA, the number of albums shipped has declined by 31 percent since 1999.

“Certainly, the results are inconsistent with virtually every other study done by academics and research analysts about the impact of illegal file sharing,” wrote Amy Weiss, Senior Vice President of Communications at the RIAA, in a press release. Officials from the RIAA did not return requests to comment for this article.

But Oberholzer-Gee said that the conventional wisdom about file-sharing is shaky because it has been based on surveys that often rely on incorrect assumptions about consumer demand, rather than empirical research like his.

“Of course lots and lots of people download music when it’s free. At the price of 0, demand is really huge. But if people have to pay $18, then they won’t demand as much,” Oberholzer-Gee said. “So thinking that every download that takes place is a lost sale is a very implausible worst-case scenario.”

Richard E. Chernela, spokesperson for Sharman Networks, the company that owns the popular file-sharing tool Kazaa, said he also believes the earlier surveys on file-sharing were inaccurate.

“Especially when you test on this very controversial area you can tell that there would be complications in those earlier surveys that relied on self-reported behavior,” Chernela said.

Sharman Networks embraced the results of the new study.

“We welcome sound research into the developing peer-to-peer industry and this study appears to have covered some interesting ground,” said Nikki Hemming, CEO of Sharman Networks, in a press release.

The RIAA, however, is skeptical of the study’s results.

“We look forward to what other academics will have to say about it since it has not been officially peer-reviewed,” Weiss wrote.

Nonetheless, Oberholzer-Gee hopes that the study will make debate about the file-sharing issue less emotionally-charged.

“I hope that we can move away from the big emotions and the big drama and the talk about persons destroying businesses and jobs and just look at the facts,” he said.