New study concludes file sharing does not hurt sales

Updated
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The draft of a new study by Felix Oberholzer-Gee of the Harvard Business School and Koleman S. Strumpf of the University of North Carolina at Chapel Hill concludes that file sharing is not hurting record sales.

“The problem with the industry view, Professors Oberholzer-Gee and Strumpf say, is that it is not supported by solid evidence. Previous studies have failed because they tend to depend on surveys, and the authors contend that surveys of illegal activity are not trustworthy. “Those who agree to have their Internet behavior discussed or monitored are unlikely to be representative of all Internet users,” the authors wrote.

Instead, they analyzed the direct data of music downloaders over a 17-week period in the fall of 2002, and compared that activity with actual music purchases during that time. Using complex mathematical formulas, they determined that spikes in downloading had almost no discernible effect on sales. Even under their worst-case example, “it would take 5,000 downloads to reduce the sales of an album by one copy,” they wrote. “After annualizing, this would imply a yearly sales loss of two million albums, which is virtually rounding error” given that 803 million records were sold in 2002. Sales dropped by 139 million albums from 2000 to 2002.”

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Dennis Lloyd

I'm a passionate, long-time lover of Apple products, and was a civil draftsman and graphic designer before creating the iLounge web site. My prior projects include work for The Los Angeles Times' LATimes.com, and the company Creative Domain, where I developed websites for clients including Columbia Pictures, Disney, Fox Studios, Universal Pictures and Warner Brothers. As the Publisher of iLounge, I direct the site's community forums, photo galleries, iPod User Group, and general business affairs, which have grown under my watch to over sixteen million page views every month. I'm happily married with one daughter, one dog (Rocket the Wonderdog), one cat (Ferris), many iPods, iPhones, iPads, and two turntables.
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