Do downloads impact music sales?

Apparently not according to a new article in the Journal of Political Economy by Felix Oberholzer-Gee and Koleman Stumpf. They look at file sharing of music and its impact on sales of albums. The issue is that in recent times, file sharing has increased and album sales have fallen. But did the former cause the latter?

Oberholzer-Gee and Stumpf look at a sample of albums sold in the US in the second half of 2002. They match this to actual downloads of those same albums from a file sharing site (OpenNap); that is about 1.75m downloads. (FYI: in this sample Australia punches at its weight as a share of world internet users)

Now the issue here is that if an album is popular it will have higher downloads and higher sales. So what they need is a factor that would increase downloads without impacting on sales in US stores. Their idea is to look at the time German kids were on school holiday; something surely unrelated to US store demand. They also consider intrinsic issues with a song such as the difficulty one might have spelling it. To be an effective downloader requires good spelling. (Indeed, let’s face it, the Internet has been a boon to getting kids to spell well).

Taking this into account they find that there is likely no effect of downloading on US store sales. The next thing for us to work out is, why?

6 thoughts on “Do downloads impact music sales?”

  1. People who download won’t necessarily buy the product anyway. Who are the people who are most likely to download? Generally younger people who may not necessarily have the money to purchase music. Even if downloads were stopped, it wouldn’t halt the decline in music sales.

    I’d actually go so far to argue that for some artists downloading actually helps them because it leads to increased sales. People can be introduced to new music and if they like it, they’ll buy it if they have the cash.

    Also of note is that in Australia, the last analysis by ARIA was that there was a slight increase in album sales.


  2. Good to see the research backs up the intuitive observation, and indeed what was the experience with cassettes and CD copying.

    However, as we know you average business executive doesn’t make fact based decisions but instead “follows the pack” we can unfortunately expect little change in behaviour from industry.


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