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P2P File-Sharing and Music Sales

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How does P2P file-sharing affect music sales? I found this interesting paper on relationship of economics of P2P file-sharing by David Blackburn,a Harvard PhD Student, mentioned at “The Long Tail” (and posted it on Slashdot faithfully). I also found this compilation of studies on P2P.

The findings are not surprising as the paper essentially states the obvious. The hits at the top of the charts lose sales, but the niche artists further down the popularity curve actually benefit from file-trading.

“Artists who are unknown, and thus most helped by file sharing, are those artists who sell relatively few albums, whereas artists who are harmed by file sharing and thus gain from its removal, the popular ones, are the artists whose sales are relatively high.”

But then some of the conclusions are shocking, e.g.

“File sharing is reducing the probability that any act is able to sell millions of records, and if the success of the mega-star artists is what drives the investment in new acts, it might reduce the incentive to invest in new talent. This is, at its heart, an empirical question which is left to future work.”

Is finding new talent outcome of investments by big labels. Hardly!

With so much ‘noise to signal’ ratio in music industry, big names give headstarts for sure, but they hardly have incentives to find new talents in an economy of abundance. Big companies were relevant at the time when technology wasn’t cheap and cost of producing and marketing music prohibitive- not anymore the case.

P2P notwithstanding, independent music is going to proliferate on its merit. Music needn’t big names to sound good.

Written by Brajesh

November 27, 2005 at 7:41 am

Posted in Economics, Music, P2P

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