Billboard on Industry Canada’s File Sharing Study

There has unsurprisingly been a tremendous amount of coverage and online discussion regarding the economic study commissioned by Industry Canada that found that there is a positive correlation between file sharers and music purchasing.  You can read the Globe, the Guardian, or hundreds of blogs on the topic.  Or you can read Billboard's coverage.  If you read Billboard, however, you won't actually learn that the study's primary finding is that P2P file sharing tends to increase rather than decrease music purchasing.  Rather embarrassingly, the article neglects to reference that rather important part of the study focusing instead on issues that CRIA would be more comfortable with, including its own commissioned study by Pollara. It is one thing for the recording industry to ignore the facts, but it is more than a little strange for the leading music trade publication to do so.


  1. Not surprised
    Given that Billboard is a trade magazine, deriving advertising revenue from the RIAA companies, and therefore the CRIA companies, one really shouldn’t be too surprised…

  2. Michael: Since I wrote the article in question, I’ll respond. I’m surprised that you accuse me of distorting facts, when you reference the last line of a 450 word story and make it sound like it was the lede. That you dispute the Pollara study — because it doesn’t support your theories of file sharing — does not make it wrong.

    However, I think the biggest issue is that you’re taking what you want from this Industry Canada study. I, however, looked at the conclusions and found this (below), as did many other readers of this blog (see the comments in the related post):

    I quote from the report: “In the aggregate, we are unable to discover any direct relationship between P2P file-sharing and CD purchases in Canada. The analysis of the entire Canadian population does not uncover either a positive or negative relationship between the number of files downloaded from P2P networks and CDs purchased.”

    Does that sound like their conclusion is that P2P “tends to increase” CD purchasing, as you claim?

  3. Three words…
    The first three words of the sentence you quote are critical … “In the aggregate”. In other words, when you look at the whole study group — including the non-P2P users — there is no effect.

    But keep going to the very next paragraph in the Summary of Findings after the one you quoted. “However, our analysis of the Canadian P2P file-sharing subpopulation suggests that there is a strong positive relationship between P2P file-sharing and CD purchasing. That is, among Canadians actually engaged in it, P2P file-sharing increases CD purchasing. ”

    So, yes – it DOES sound like their conclusion is that P2P use causes an increase in CD purchasing.

  4. Re: Three words…

    Not arguing with your point, as I believe you are correct. The converse, of course, is that since the net effect is 0, then non-P2P users must be purchasing less CDs.

    In other words, the market share of the CRIA companies is down because people aren’t buying their product. The increase among the P2P users appears to be among the labels not represented by the CRIA and independent artists who publish their own CDs. The artists that you are more likely to find because of the P2P networks.

  5. Various Inferences…

    That’s one possible way of looking at it. The other way is that everyone’s sales are “down” 30%, but due to “p2p previewing”, p2p users have pushed that back up to only “down 20%”.

    If that’s the case, then suing p2p users is even worse than many people think. If the major labels ever actually succeed in cutting off p2p exchanges, they would see a sudden further drop in sales — with no p2p to explain it.

  6. CDs are obsolete anyway
    In the last 5 years houses price is tripled as well as gas price and anything else. Salaries on the other hand are not increased as much. Entertainment is becoming more and more a luxury and music lately is less and less creative and more repetitive and unworthy to buy. Furthermore the iPod phenomena (e.g. hundred of iPod gadgets in every store, commercials promoting cars with embedded iPod cradles, etc.) is changing the way we listen to music. I won’t be surprised that despite any restriction they could think of, CDs sale is going to fall anyway. A massive use of MP3 related technology is already in place and I’m afraid CDs will be soon artefacts belonging to the past. The record industry is aware of that and is trying now to get control of the profitable MP3 market provided that they stop first the unprofitable “file sharing” popular bad habit.

  7. Real reason for decline….
    The REAL reason for a decade of decline is MORE likely that consumers are smart and have just \’walked away\’ from having anything to do with record companies.

    Historically, it\’s hard to pinpoint exactly WHEN the music industry became a litigious industry, but eventually consumers everywhere lost the faith. The result has been rather like a slow and seething psychological mindset that the best decision is to just boycott the whole music thing.

    Hey it has been a full TEN years of being shoveled pop idol SH*T in the guise of musical art, prices which remain up on another planet while people can buy a copy of \’click\’ for 9 bucks. And honestly, give your head a shake… What consumer base is going to hang around supportive only to be threatened by lawsuits, and publicly regarded \’en masse\’ as THIEVES at every turn?

    C/RIAA and the statistician guys will likely continue to argue forever about the cause of music\’s plight when really the answer is simply found in one word \”TRUST\”… Once they threw consumer trust into the wind it all ended there. If you want the actual date? think it was September 9, 2003. Once the first threat was launched into the marketplace, the litigious industry thought they were on a roll and found additional ways to break consumer trust further… DRM, copy-protected disks, rootkits, etc. It just went crazy from there and it doesn\’t take a rocket scientist to note that the sales numbers just fell more quickly after that.

    Can any of us – artists, lawyers, entertainment moguls, academics, statisticians, who EVER – can we blame ANY single consumer for just \’getting over it\’ and making the choice to move on?

  8. seeking facts says:

    Interesting take on the study from Dr. George Barker: As I outline below there is a fundamental and simple flaw in the study which has been referred to and publicly promoted by Professor Geist. Indeed the errors in the report are so serious as to completely undermine the conclusion Geist draws from it, and render much of the additional commentary and interpretation derived from it in the media (and the blog columnists) quite misleading.

    But first what does Geist say about the study ? Geist on his blog at [ link ] claims “A newly (sic) study commissioned by Industry Canada “The Impact of Music Downloads and P2P File-Sharing on the Purchase of Music “ ..finds what many have long suspected (though CRIA has denied)..that .. among Canadians actually engaged in it, P2P file sharing increases CD purchases.”

    This claim by Geist reinforces a comment on Industry Canada’s website that the study “ found that music downloads have a positive effect on music purchases among Canadian downloaders” . It further echoes a claim by the authors in their report that “among Canadians actually engaged in it, P2P file-sharing increases CD purchasing. We estimate that the effect of one additional P2P download per month is to increase music purchasing by 0.44 CDs per year”

    The false impression these claims give is that downloading increases demand for CD’s. These claims have now been picked up by media around the world including the Sydney Morning Herald (SMH) (see “Piracy not raiding CD sales” SMH 6 Nov 2007).

    A colleague and I were prompted by this publicity to review the article and write up our conclusions which we have posted to the Centre for Law and Economics Website at the Australian National University (see [ link ]) We find that Geist, Industry Canada and the authors’ conclusions are not supported by the study. The primary problem is that the authors have drawn an incorrect conclusion from their results.

    They observed a positive relationship between the amount of file sharing and CD purchases among file sharers. From this they concluded that file sharing increases CD purchases. On the contrary, we and researchers of similar studies, believe this positive relationship is more likely to be because, among file sharers, those who want more music are both more likely to file share and more likely to purchase CDs. Quite simply the more you like music, the more CD’s you buy, and the more you download.

    Having observed this the authors’ error is similar to observing a positive relationship between the frequency of going to hospital and becoming very ill, and concluding going to hospital is bad for one’s health. Or on a rainy day concluding that the use of umbrellas causes puddles. Or observing the fact that people who jump subway turnstiles also purchase a large amount of subway tickets and then concluding, erroneously, that jumping turnstiles increases the purchase of subway tickets (rather than concluding that people who jump turnstiles are simply much more frequent users of the subway system and, therefore, ipso facto also purchase more subway tickets).

    This type of error or problem is well known in econometric studies and in particular in studies of file sharing. Correlation does not imply causation. There is no reason why this problem in the current study should have not been identified earlier however. The relevant theory and empirical analysis required to avoid this mistake is simple and well known. What, in fact, determines the amount and mix of CDs and downloaded music people acquire is their relative income, their relative love of music and the relative price, convenience and quality of CDs versus the costs, risks convenience and quality of downloading.

    The results of the study are consistent with the view that among file sharers, those who love music more will buy more CD’s and download more music. This result is consistent with prior studies that have found evidence that downloading harms CD sales.

    In conclusion one is left with a question for Professor Geist – why has he so uncritically accepted and promoted a study which is so deeply flawed ?