File sharers buy more music

The BBC reports that people who use "illegal" p2p file trading services, are music fans who spend considerably more buying than the average music fan. Specifically, the article says that the average music fan spends £1.27 ($2.21) per month, where as the people who use P2P services spend £5.52 ($9.62) per month.

The key question, I believe, is whether use of P2P by music fans causes them to buy more or less music. This study shows that P2P users are active music buyers, probably forming a core "music intelligentsia" which the music industry should want to win over, since they probably are trend-setters. It may be that P2P functions as "trial-ware" for these people, causing them to evaluate and buy more albums. Or, P2P may be a substitute for buying some number of albums.

The BBC story does mention this issue, with this quote from BPI: "The consensus among independent research is that a third of illegal file-sharers may buy more music and around two thirds buy less. That two-thirds tends to include people who were the heaviest buyers which is why we need to continue our carrot and stick approach to the problem of illegal file-sharing." If this is truly the case, and the 1/3rd who are buying more aren't making up for the 2/3rds who are buying less, then the music industry clearly loses with P2P. But, I also suspect that people are using P2P because of the ease of finding music and (vitally) the lack of DRM.

My own hunch is that music is like other collectible items -- it's hard to have too much of it. And with downloads not using up shelf-space like CDs do, it's easy and desirable to have several thousand albums in your collection. iPod users I've spoken to tend to want a much larger collection of music in their iPods than music fans of a decade ago, because they're **listening to their music more of the time**.

The BBC story refers to a report authored by Paul Brindley, director of "The Leading Question", an music industry research firm. I've met Paul before, as he runs Musically, which publishes an excellent industry newsletter. I was surprised and heartened when I met Paul upon arriving to the UK a year ago, finding him unusually clue-full about the state of the music business and the Internet. Then again, he told me at the time that I was unusually open in disclosing how Magnatune worked, which he found refreshing.

I corresponded privately with Paul Brindley, and he wanted to clarify his position:

"Our point was not that file sharers buy more music than most music fans but
that those file sharers who are buying less CDs than they were before
because of p2p also happen to be spending much more on legitimate digital
music than most music fans." (n.b. - he gave me permission to reproduce this email paragraph in the blog)

Comments

[Roy Phillips]

Consider this (my) scenario:
I like Portishead, but they haven't had a release for a few years, so I google 'em and find out about a bunch of other bands, say Lemon Jelly, Sneaker Pimps, Mandalay... Well, I'm not about to go out and buy half a dozen albums in the hope I might like a couple of tunes (even if my local record store had them), and there is very little chance of hearing them on the radio or on MTV.

Enter p2p: I download some tracks, get a feel for what I like (become a fan) and actively hunt down CDs on Amazon, Ebay, speciality or big records stores and buy them. The result? I've bought perhaps 20x more CDs since having the opportunity to explore music with p2p than before, I have bought some great albums from bands like Matumbi, that haven't been available for years, as well as discovering a wealth of unsigned bands that are exceptionally good.

With p2p, you have a chance to explore what music is out there, past and present, make links and hear stuff you would have never heard in a million years. My only complaint is the amount of money I've spent on CDs in the last couple of years: mostly to the RIAA labels.

The world is changing...

[John Buckman]

Roy writes: "Enter p2p: I download some tracks, get a feel for what I like (become a fan) and actively hunt down CDs"

Yes, that's a scenario the industry ackowledges as occuring, but their numbers show that while 1/3rd of users do exactly what you describe, 2/3rds do not, and that's what their anti-p2p argument is. 1/3rd of p2pers buy more music because of p2p, and 2/rds buy less.

[Pedro Rosario (prosario_2000)]

I think that part of the problem, and few people mention it, it is a problem of the ability of the public to buy as much as the record labels are providing. These last few days I've gone to several record stores (I try my best to buy non-RIAA material), and to buy just four CD's will cost relatively a big amount of money for the average consumer. Yet, the record labels produce many CDs as much as they can, which generally are CDs with one or two good songs while the rest are just to "fill" the CDs, at very high prices. Then there is the option of buying a CD with one or two songs but at a relatively high price. Plus the whole technology included in CDs and their artwork elevate artificially the prices.

Why are 2/3 of the public who download p2p not buying the albums? I doubt that the RIAA has not made an adequate study on the matter. How much of those who download music will not buy music anyway because CDs' high costs? I would be asking that question.

[James Jensen]

Another question is how many of that 2/3rds buy less because they can't stand the RIAA and big name music labels? You can't treat people like they do and expect them to keep buying, especially when they know it's not even supporting the artists fairly.

I'm also reminded of something a friend of mine said about downloading music: he'd download the songs he liked because buying the whole album was "a vote for more of the same."

[Harry]

John, I 'd like to have your point of view on this:
isn't P2P and piracy erroding all music labels revenues? RIAA is obviously loosing the most but isn't this practice affecting everybody in the system?
You are not using and apparently not planning to use any DRM scheme. Have you tried to quantify lost revenues due to illegal sharing of magnatune songs? How do the artists feel about that?

Just thinking here that illegal sharing might well be mostly a practice of people with little respect to other people's work, covered under idealistic rhetorics.

Thanks