Study finds P2P sales effect virtually zero

Written by Brett Thomas

February 12, 2007 | 16:52

Tags: #p2p

Companies: #bittorrent

First, a note: Neither myself nor the staff at bit-tech are condoning piracy in any way.

Now that we have that out of the way, let's get to the story at hand. Has everyone noticed that the first thing the RIAA goes for when it discusses piracy is lost sales? Often, those who pirate argue that if they didn't, they wouldn't buy it anyway. Apparently, they aren't lying. A new study released takes a look at empirical sales data over a couple quarters in 2002, following over 1.75 million songs through both sales and illegal downloads.

In order to conduct the study, researchers tackled the problem in an unusual way. Rather than just following US markets, they followed German downloads and uploads from students on holiday. Germany is the #2 provider of illegal music shares, accounting for 1 in 6 downloads - when German student upload traffic increased, US sales should have decreased.

The findings? P2P network activity has a whopping 0.7% negative effect on sales - well less than the margin of error for the study. Even taking the most negative figures (counting the margin of error in favour of the RIAA's claims), the study can only account for 6 million out of the 80 million units of lost sales the RIAA blames on piracy in 2002. This means 74 million units just plain didn't sell, and that had nothing to do with piracy - even if everything that could have gone wrong with the study did.

According to the study, much of the loss of sales has to do with how the RIAA chooses to account for units in the first place. Rather than counting units sold to consumers, it counts units shipped to retailers. Therefore, since many retailers have reduced how much they order as stock to sit on shelves, the RIAA says "sales are down" and blames the numbers on rampant piracy.

Before online shopping became such a big thing, stores that carried music would order a plethora of stock and let it sit - since there was nowhere else to conveniently buy it, it would eventually move. Nowadays, in order to keep prices down and competition high, most stores just don't keep as large of an inventory at one time.

Of course, this will all likely end up as every other study on the issue does - buried ten feet deep on some desk somewhere whilst the execs keep spouting off about lost revenue. However, at least there is an empirical study now to back up the claim everyone has been saying for years - the people who pirate either weren't going to buy it anyway, or go and buy it afterwards to have a legit copy.

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