File Sharing: No Effect on Sales?

A new study (pdf) by Harvard and North Carolina universities indicates that file-sharing has a near negligible effect on music CD sales.

The main points were:

  1. ‘High selling albums actually benefit from file sharing.’ File sharing forces CD prices to drop, therefore leading to more CD sales. People on P2P networks who browse other people’s files and like the music, may purchase the CDs.
  2. A survey indicated that file sampling in fact led users to purchase an additional 8 albums. There were only 159 people surveyed (footnote on p3).
  3. ‘While downloads occur on a vast scale, most users are likely individuals who would not have bought the album even in the absence of file sharing’. (p3-4. Wha-? So they’re saying these users wouldn’t buy the albums at all, yet they’d download the files anyway, just because they can?)
  4. The study only covered US users, from 8 September 2002 to 31 December 2002. It admits that CD sales typically increase significantly during Christmas season (so would it be misleading to imply that sales were barely affected during this period?)
  5. The data collected was based on downloads from OpenNap, a centralised P2P network (p8. Why didn’t they use something more popular like Kazaa?)
  6. The report concludes with a positive outlook on file sharing, by ‘increasing aggregate welfare’.

This doesn’t make sense to me, or to other people. I didn’t think they had a realistic representation of users. Even during my time as an undergrad living on campus (circa late 90’s) people were downloading music from the old, free Napster. Very few purchased CDs – we were, after all, poor students in the midst of the Asian financial crisis. [Note: Being anal about music copyright, I’ve never used a file sharing program in my life.]

Maybe if an album only had one good song, people would download the MP3 instead of buying the CD. Maybe some other people would buy the CD after sampling a few MP3s from the album, if they liked what they hear. My mind’s all fuzzy now after looking at the statistics and equations. What do you think about file sharing?