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IFPI's response to EU piracy study - Really?!?

André Engelhardt

By now you have probably heard about the European Commission's JRC report which in short stated that piracy has no detrimental effects on music sales. As to be expected there have been quite a few responses coming in today and I  would like to highlight the IFPI's response:

"IFPI believes the JRC study is flawed and misleading. The findings seem disconnected from commercial reality, are based on a limited view of the market and are contradicted by a large volume of alternative third party research that confirms the negative impact of piracy on the legitimate music business."

Reading through their full statement (pdf) shows that they do the same picking and choosing that they accuse the JRC study of.

One quote I loved that shows the trigger finger reaction to this study is the following:

"The authors assume that visits to legal download sites, controlled for interest in music, are a good proxy for purchases."

Well of course they assume that because it is a simple and safe fact to assume. The IFPI claiming that "visiting legal music sites is not a proxy for an increase of sales" leads to the logical conclusion that they also think the following:

  • Legal music download sites visitors are either pirates or just visiting but don't intend to buy
  • The sites that legally offer music make no money from sales to the people "clicking" around on their sites
  • Researching new artists, looking up songs etc. won't lead to sales
  • Their mommies didn't love them

Ok so that last point I can' t prove but please, when they say that visitors to legal music sites aren't good for sales then what is? Customers walking into other kinds of stores in the real world aren't good for sales? Well your store has to be really bad if it can't turn over any sales even though you've got millions of people walking into them!

The IFPI also keeps stomping around on this completely moot argument, I quote:

"[...] while some file- sharers spend a lot on music (physical/digital), this is counterbalanced by many file-sharers that don’t buy any music - as many as 44.8% of file-sharers in the UK buy no music at all. [...] research in the US also found that less than half of P2P users bought music – only 44% bought CDs and 35% bought downloads. A more recent study by Ipsos MediaCT3 across nine markets, found that only 35% of P2P users also purchase downloads via services such as iTunes."

So that statement above sounds valid doesn't it? And yes, the numbers are (probably) true but what they're leaving out is that those file sharers, caused a huge increase in sales in the first place! Yes only half of them bought CD's and only a third bought digital downloads but without file-sharing there would have been way way less than that.

Let's think about this in a different way:

I am the owner of a record store and I sell good old fashioned cassette tapes (remember those?). Now the store's location really sucks so I get about 50 sales from 500 visitors coming into my store every week.

Then a few years later a new high school is being built right next to my store and it's massive. It's the biggest high school in the world and it's got 5 million students going in and out a day. Of those 5 million students I get about 100'000 coming into my store a week. Of those 100'000 a whopping 44'800 never buy anything! The other 35'000 people started buying cassettes now every week and a lot of them bought not just one tape but 10 to 20!

Now the reaction from the music industry would translate to: THOSE 44800 PEOPLE ARE BAD FOR BUSINESS BECAUSE THEY DON'T BUY ANYTHING!

What it should be is: AWESOME, 35000 PEOPLE BUYING MUSIC THAT WOULD LIKELY HAVE NOT BOUGHT NEARLY AS MUCH IF IT WASNT FOR SHARING!

Without file sharing the ability for easy music discovery goes down, with music discovery options reduced you will go back to consuming the very limited influx of music you can get through radio stations that all play the same crappy music, now instead of going out to buy several different artists' work that you have newly discovered you buy Katy Perry, Justin Beaver and whatever other One Hit wonder is currently being played up down left right and sidewards on the big outlets.

So am I completely wrong here or is the IFPI just really, really ... let's say "one dimensional"?