News

The entertainment industry has been crying wolf about the impending death of its collective livelihood since the first recording device hit the market decades ago. In spite of those dire predictions, reel-to-reel tape decks, cassette recorders, and VCRs hardly dented sales, and may in fact have contributed to unprecedented world-wide growth.

But the labels are again braying about the copyright-bashing monster at the door, this time in the form of file-sharing systems such as Morpheus, Napster, and Audio Galaxy, as well as the CD burners that are found in most new computers. Independent researchers, however, are once again coming to a different conclusion.

We reported back in May controversial results compiled by Jupiter Media Metrix suggesting that the proliferation of file-sharing and robust CD sales may actually go hand-in-hand. And now, new research from Ipsos-Reid seems to support that idea, indicating that record labels may have been a bit hasty in beating Napster into the ground.

Findings released by Ipsos-Reid show that "downloaders do not stop buying prerecorded compact discs when they discover downloading." In fact, Ipsos-Reid says it has found that "81% of downloaders report their CD purchases have stayed the same or even increased since they initially began downloading music from the Internet."

What is not in doubt is that file-sharing has reached an estimated one-fifth (19%) of the American population aged 12 and over, who, researchers say, have downloaded music or MP3 files from an online file-sharing service. This translates into over 40 million users within the current US population. What's interesting is that this number is nearly equal to the proportion of Americans who indicated they had downloaded a music or MP3 file from any website in December of 2001 (23% of Americans aged 12 and over).

According to Ipsos-Reid, "Contrary to the widely-held belief that file-sharing is an activity primarily undertaken by cash-strapped high-school and college students, post-collegiate adults also report sampling this often technologically cumbersome activity, with 26% of those between the ages of 25–34, and 14% of those aged 35–54 reporting having downloaded music or MP3 files from an online file-sharing service."

Ipsos-Reid researcher Matt Kleinschmit adds, "Clearly, there is a sizable portion of the population that has indeed obtained music through an online file-sharing service, especially in the younger demographic groups. What is most interesting, however, is that those in older demographic groups also report using these services, and these demographic groups typically include individuals with disposable income [who] are often highly prized by advertisers."

In addition, Ipsos-Reid finds that downloaders appear to have an appetite for online music-related information, as over eight in ten (84%) report also using the Internet for more than just downloading, including listening to song clips, reading about lyrics and tour information, and researching bands prior to actually purchasing their CDs. And nearly half (47%) of these individuals indicate that they have subsequently purchased a particular CD from a band or artist solely because of something they first read or listened to on the Internet.

And in this era of increasing radio homogenization, file-sharing may also be opening new musical vistas to online consumers. Nearly one-third (29%) of American downloaders in the study indicate that their typically preferred genre of music has changed since the inception of their downloading behaviors, and one-fifth (21%) of downloaders aged 12 and over report that their radio listening activities have also changed since they began downloading.

Also joining Ipsos-Reid and Jupiter in their findings that file-sharing may not be the record business's ultimate nemesis is Cato Institute researcher Stan Liebowitz, who in a Salon interview recently stated that "file-sharing seems like it should be causing a lot of harm. But we're not seeing it." Liebowitz's own most recent research finds that a connection between the music business slump and piracy is tenuous at best, especially once other factors are taken into consideration. Liebowitz says, "There's a 5% decline in CD sales this year, but that's what you might expect in a recession. So we're still not seeing much. And what I'm beginning to suggest now is that perhaps people aren't going to replace the purchase of CDs with these MP3s."