Filesharing Is Not the Enemy

In a 2001 episode of "The Proud Family," a Disney Channel cartoon series, the teenager Penny gets addicted to filesharing after she is shown the wonders of a Napster-like program called EZJackster.

Crazed, she starts downloading all the music she ever wanted. Soon after, chaos erupts. Her favorite singer doesn't get his royalty check, her local record store goes out of business, the police come to her house and threaten to take her jail, and worst of all, her mom takes away her computer. Penny practically single-handedly destroys the U.S. economy before she finally sees that filesharing is wrong.

The episode rings with Reefer Madness-era propaganda; the 1936 film promoted the idea that marijuana makes people go insane, have promiscuous sex, and dance maniacally to jazz music in seedy apartments.

Still, the episode's underlying message -- that filesharing is stopping CD sales and destroying the recording industry -- has been promoted by groups like the Recording Industry Association of America (RIAA) ever since Napster hit the mainstream five years ago. Several studies have come out supporting the RIAA's assertions, which have been used to back up some of its actions, like filing lawsuits against people for sharing files and lobbying to have peer-to-peer filesharing categorized as a criminal activity.

But a new study by Harvard Business School and University of North Carolina is going against the popular beliefs surrounding filesharing. After tracking 1.75 million downloads over a 17-week period in 2002 and then comparing those observations to the sales of 680 popular albums, the study found that filesharing has no negative effect on CD sales.

In fact, for the most popular 25 percent of CDs, the study found that downloading boosts sales. For every 150 songs downloaded, sales of that album jumped one copy.

"Initially, we were surprised by our results, given the consistent claim that P2P hurts sales," says Koleman Strumpf, co-author with Felix Oberholzer-Gee. "But on deeper reflection, not so much. Filesharing can potentially boost sales through the user learning about new music, and this could offset the substitution for buying, as is often claimed."

Stealing or Sampling?

The response to the Harvard-UNC study has been mixed. The RIAA decried the study, calling it "inconsistent with virtually every other study done" on the subject. While previous studies have relied on surveys asking users about their downloading habits, the Harvard-UNC study was the first to directly compare actual downloads -- using server logs from OpenNap, an open source Napster server -- with album sales data from Nielsen SoundScan.

Other researchers, like Stan Liebowitz, Professor at University of Texas at Dallas, have criticized the details of the study. Among other things, Liebowitz believes the study shows the result of advertising on popular music, not necessarily the effect of downloading on the entire music industry.

"It's a study that on the surface looks pretty good, but when you get down to the nitty-gritty, serious problems arise," he says. "I don't find the results believable."

Others say the study is evidence of how little we know about the effect downloading has on music sales, and that alone is reason to proceed judiciously when creating laws about the technology.

"The only thing we can confidently say is that filesharing makes some people buy more records and some other people buy fewer records," says Fred Von Lohmann, Staff Attorney for the Electronic Freedom Foundation. "But there's no very clear data on what the ultimate balance of the situation is."

Downloading has been likened to singles, cheap recordings with one or two songs that were used to whet listeners' appetite for a full album. Like downloading, some people bought singles to get the one song they liked and others bought them to sample the music before buying the full album. Aptly enough, singles were phased out by the record industry because they were suspected of taking away from the profit margin of full-length albums.