Thanks to the Germans, Maybe the RIAA Should Sue Themselves

A recent story from Ars Technica illustrates a study in the Journal of Political Economy by Felix Oberholzer-Gee and Koleman Strumpf has discovered that “illegal music downloads have had no noticeable effects on the sale of music, contrary to the claims of the recording industry.” The idea seems a bit far fetched, considering how many internet savvy computer users have confessed to file-sharing and illegal downloading. The German study surveyed P2P servers containing sales from SoundScan. The survey then tracks the millions of songs downloaded on over 600 albums that were sold during th same time period. One may ask how a German study can speak for US Sales. Out of every 6 downloads in the US, 1-2 of them come from Germany. The notorious sales slump of CD sales during the last 6 years is not really victim to digital downloading.
“Using detailed records of transfers of digital music files, we find that file sharing has had no statistically significant effect on purchases of the average album in our sample," the study reports. "Even our most negative point estimate implies that a one-standard-deviation increase in file sharing reduces an album's weekly sales by a mere 368 copies, an effect that is too small to be statistically distinguishable from zero.”
The survey theorizes that the slump can be in fact linked to other causes. The recording industry seems to only look at CD’s shipped, rather than CD’s sold, which could stain SoundScan’s tallying. The record stores carry less CD’s, due in part to a shift in inventory: DVD’s. Much of the public’s disposable inventory is likely to b spent on a DVD rather than a CD. Best Buy discovered this correlation when they saw a boom in DVD sales and a slump in their CD sales.
But what the article fails to address is the fact the record industry is not healing its own wounds, rather hurting itself further by bumping up CD prices. Average Suggested Retail List Price is 17.98. Almost a whopping $20, which most consumers would likely prefer to spend on a DVD. Perhaps the RIAA should start pointing their fingers somewhere else and stop filing so many petty lawsuits.

The article can be viewed at:

http://arstechnica.com/news.ars/post/20070212-8813.html