May 3, 2002 12:40 PM PDT

Study: File sharing boosts music sales

Hundreds of millions of songs may illegally trade hands online every month, but file swapping may actually be causing people to spend more money on music, according to a new research report.

A study released this week by Jupiter Research reports that about 34 percent of veteran file swappers say they are spending more on music than they did before they started downloading files. About 14 percent of heavy file traders say they now spend less on music.

The findings, which are drawn from a survey of 3,319 people conducted last summer, are contrasted with claims from the record industry that file sharing and CD burning have been key contributors to a drop in major-label music sales in 2001.

"It is safe to say that active usage of online music content is one of the best predictors of increased consumer purchasing," lead author Aram Sinnreich wrote in the report. "Music sellers should devote their limited resources to online marketing and distribution--rather than eradicating the phantom threat of file sharing--if they truly wish to stanch the blood flow and turn the music market around."

The report comes at a moment when file sharing has reestablished itself as a hugely popular mainstream phenomenon, despite Napster's disappearance. Software such as Kazaa, MusicCity's Morpheus and Audiogalaxy continue to attract millions of downloads a week.

According to Jupiter's report, about 19 percent of average online music fans say they buy more music than they did before going online. About 34 percent of "experienced file sharers," or those who have used file-trading networks for more than six months, say they now buy more music. About 36 percent of people who are veteran file traders and have CD burners said they have increased spending.

Among those who own recordable CD drives and subscribe to high-speed Internet access--but don't swap files--the report found that about the same number of people reported increasing and decreasing spending on music. Jupiter concluded that each of these technologies has little net affect on record sales.

The Jupiter study did note that the average drop in an individual's music spending was larger than the average increase in spending. That effect could explain the overall drop in record sales, the authors noted.

Critics of this type of study, including some in the record industry, have speculated that people don't always tell the truth to researchers on controversial issues such as this.

Figures released by the International Federation of the Phonographic Industry (IFPI) last month reported what appeared to be a different effect. The global industry trade group said that 35 percent of people who download more than 20 songs a month say they buy less music as a result.

The figures from both sides of the debate have been key bits of evidence as policy-makers try to decide how to address the issue of digital piracy. A closely watched bill in Washington, D.C., would ultimately require all consumer-electronics manufacturers and computer companies to include technology that blocks piracy.

That bill has drawn bitter opposition from companies across the technology sector.

 

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