Via The New York Times: Two economists have released the draft of a study concluding that illegal music “[d]ownloads have an effect on sales which is statistically indistinguishable from zero, despite rather precise estimates.” Felix Oberholzer-Gee of the Harvard Business School and Koleman S. Strumpf of the University of North Carolina at Chapel Hill have conducted what the Times is calling “the first study that makes a rigorous economic comparison of directly observed activity on file-sharing networks and music buying.”
[T]hey 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.
So why have sales been dropping? Here’s my take, and keep in mind it’s only a theory unsupported by any rigorous analysis: because most music being produced by the music
sucks. And the level of suckitude (or suckage, if you’re a speaker of French) appears to be following an upward trajectory.