New Study Claims Piracy is Not Hurting the Music Industry

Illegal music downloads are not hurting the music sales, they even boost them, says the recent study.

Ultimate Guitar

Online music piracy is without question ranked among the top reasons for the decline of music industry in recent years. Many musicians and prominent business figures have blamed the illegal downloads for the difficulties they are facing, even going far enough to say piracy will mark the end of entire industry.

But according to the latest study published by the European Commission Joint Research Centre, piracy is not to blame. Using Nielsen clickstream data on a panel of over 16,000 European consumers, Luis Aguiar and Bertin Martins reached the conclusion that illegal downloads have no essential effect on the number of legal purchases.

"Perhaps surprisingly, our results present no evidence of digital music sales displacement. While we find important cross country differences in the effects of downloading on music purchases, our findings suggest a rather small complementarity between these two music consumption channels. It seems that the majority of the music that is consumed illegally by the individuals in our sample would not have been purchased if illegal downloading websites were not available to them. The complementarity effect of online streaming is found to be somewhat larger, suggesting a stimulating effect of this activity on the sales of digital music."

But in the most interesting part, the findings even suggest that illegal downloads are boosting the legal sales for 2%, saying that "Internet users do not view illegal downloading as a substitute for legal digital music." Interestingly enough, the study also claims that illegal downloaders are twice as active as the legal ones, meaning that more passionate listeners tend to check multiple sources prior to making the purchase, boosting both illegal and legal downloads.

"Although positive and significant, our estimated elasticities are essentially zero: a 10% increase in clicks on illegal downloading websites leads to a 0.2% increase in clicks on legal purchase websites. Online music streaming services are found to have a somewhat larger (but still small) effect on the purchases of digital sound recordings, suggesting complementarities between these two modes of music consumption. According to our results, a 10% increase in clicks on legal streaming websites leads to up to a 0.7% increase in clicks on legal digital purchase websites. We find important cross country differences in these effects."

The subject of music downloads is definitely a complicated topic, as it is hard to reach any concrete evidence on either of the sides. What this study surely goes to show is that things are by no means black and white and that access to free music can have its advantages, if approached properly. The impact it will have on the music industry yet remains to be seen and further innovations are likely to be required.

24 comments sorted by best / new / date

    Gerard Way Jr
    "Internet users do not view illegal downloading as a substitute for legal digital music." Yeah, because digital music from iTunes etc sucks either way. The best formats available - WAV, CD, Flac, etc - are hard to find without CD, cheap/easy, or used by a minority of music consumers respectively. Those who are downloading enough to put a "dent" in the system are after high-quality. We don't care about iTunes and their shitty 256kbps or whatever it is. Of course we'll buy a 3-10 dollar CD used on Amazon or whatever. On that note, with the phenomenon of re-selling your music over the Internet (which the bands don't profit from), to what extent is the industry effected? Why aren't we seeing those numbers? The original copy goes back into the industry, sure, but how many CDs are sold, copied, resold, etc? Is THAT "illegal"? Not to mention that it's so ****ing hard to find in the last couple of years that you need to be stupid enough to torrent, using VPN, or knowledgeable of sources of digital music via zip/rar etc - the average music consumer isn't any of these. They're plebs who just want their crappy 3-or-4 pop song from the flavor of the month. They'll pay the buck and a half for their music, and they're in the majority. Anyone truly passionate - and with the stipulations I'm thinking of, it's a minority - about getting music is looking for something high quality. That's most readily available on CD. And hell, if we supposedly don't care enough to buy CDs, is it affecting the industry any more than making mixtapes did in the 80s-90s? We weren't going to buy them anyway. Come on. If everyone who liked an artist or particular song or whatever was going to buy records, would platinum sales not be considered the low end? A million is not a lot. In my country, it's something like .003% of the population. If anything harms music sales, it's the quality of the music. No one's going to pay 15 bucks for Nikki Minaj or whatever it is this year. On that note, prices and economy affect sales to an incredible degree and never seem to show up in these studies. Is it really making an incredible difference if, even with free YouTube downloaders and the like, phenomenons like "Gangnam Style" end up at the top of the digital charts for weeks on end? These are questions that don't seem to be getting the attention they need. It's all a matter of "are piracy numbers up and are sales down"? It's like asking "are movie theater ticket sales down and are shitty copies of the movie more available"? Who wants the shoddy copy? THE MOVIES SUCK. Does no one look at that? Does no one look at who internet users are? UG? 4chan? Even reddit, tumblr, etc? No, it's not the majority of internet users, but if any of those sites reflect the taste of the population, of course sales are down - because the quality of the music being sold on the internet, to the internet's users, does not meet standards. Pop users are on Facebook and YouTube. They're involved; they aren't using the Internet for music. They aren't actively looking for music. They listen to the radio and pop channels on Spotify and still get their crap from there. And - I can't believe it's not butter - those songs still sell. I mean Am I pulling this out of my ass
    I agree wholeheartedly. It's the same argument as people saying that unemployment rates have dropped. Its irrelevant due to all the people that aren't technically a part of the job market. Same goes for music and the music industry. The industry itself is not comprised mainly of the record labels that want to make their money. It's also the concerts, merch, promotion, and in general, the listening of the music. As long as people listen to the music, the end of music has been achieved.
    Alright people make up your damn mind. Last week illegal downloads were killing the industry, this week they have no reprecussion. Furthermore, if someone wants to take the time to download my Band's music I am flattered. Granted I do not make a living off of it.
    Comeback Kiddd
    We live in a day and age where getting free music is just a click away. I do think we affect sales and kill off indie artists. Say I download 5 albums from 5 different artists and they all sound good but I can only support 1 band to buy an album(or shirt or whatever), I will choose my favorite or the one that sounds the best to me thus, killing of merchandise sales for the other 4 because i chose the more dominant sounding band. We are and will make it hard for new artists to succeed but I also believe it comes with the territory since technology is constantly evolving. That being said its also up to artists(indie) on how to promote their music to make us buy their album instead of the other by putting the better music out. Tough love but tough luck
    The article has a bit of a point though, where maybe had you not downloaded those 5 albums then maybe you would never have even heard and supported the one you'd end up supporting. Music is a competitive area anyways. It's not just who gets your money, but also several artists going for a slot to book a gig, or several bands trying to get signed. In a lot of cases it's always several trying and a few succeeding. Could be said about the market model for everything actually.
    Skort Zial
    I kind of understand and agree with this. I don't Legally or Illegally download music, I still always buy a CD, so only when I can afford it do I buy new ones. Whereas if I was to illegally download, I could listen to a variety of bands and pick the ones I like, such as smaller bands, as opposed to just playing it safe.
    Mr Brownst0ne
    I find this hard to believe. If downloading music for free, illegally, is not having a detrimental impact on the sales of digital music (but in fact can promote it) then why does music not sell anymore? Why are songs getting to number 1 in the charts with a record low number of downloads?
    link no1
    I find it hard to believe since albums that sell thousands of copies are considered a phenomenal selling album, while I remember the same only being said for albums that sold millions.
    Emenius Sleepus
    Because the cost of living keeps rising, and a lot of people that discover new music are between the ages 15-25 with lower incomes. If not for "illegal" downloading, half of the artists that I listen to would not have gotten any of my cash simply because I would not have heard of them nor had a chance to hear their music
    I've done a few essays, college and uni. about piracy. And most artists see it as a good thing, people make music to be heard and loved and if your in just for the money good luck with that. most artists make the most profit from shows. and i've downloaded illegal music before as i still do. and i also buy CD's i wouldn't buy something without knowing beforehand. as a result of downloading illegal music i've become a huge fan, bought merch, gigs, cd's etc.. there is so many ways a band can profit from illegally downloading music. for example. youtube, now instead of banning your video of a song you uploaded illegally, it puts ad's on the video. and a link to buy the song. the artist's make a small profit from the ad revenue. and hopefully also get the song bought from ituns etc.. i could seriously go on for a long time about music piracy. but i think counting betrayal. if your band focuses on albums and you think you'll make a lot of money out of that you're delusional. if someone downloads your songs illegally you should be happy that they actually like your music. Because that fan. will show it to a friend who will pass it on and they will go to your shows.
    I don't agree with this by any means and I find this highly unorthodox. All this is saying is that it's okay to illegally dowload songs, and is obviously promoting the act. Man indie artist, such as myself, don't often play gigs and focus mainly on our albums. If people download our music illegaly, then what revenue are we aquiring from our music?
    Whether you agree with it or not is irrelevant. And claiming it to be unorthodox doesn't degrade its validity. Science doesn't care about your opinion, and if you cannot take the time to shut your butthole of a mouth and listen to it for a wee bit, don't respond to the article. Secondly, if your only justification for being an artist is money, then in my opinion, you will never deserve to be one.
    I actually tend to always download my music illegally first, for I do not know what the album can give to me. Then after I've listened to it I decide to either throw it away, or to buy it. If I don't have the money I keep the illegal version untill I can afford the legal one. I wouldn't probably have bought many albums if it wasn't for illegal downloading.
    They shouldn't confine the study simply to torrenters and iTunes...ers... They should look at people like me who download the entire discography of a bunch bands then go out and buy their album. Example: was told to learn a Billy Idol song, downloaded a few songs, liked what I heard (never really listened to him before) and within the week I had a few Billy Idol CDs in my car and would go see him if he came round Salt Lake... And none of that would have happened if I didnt get that little torrent
    No shit...almost every band I've seriously gotten into has been because of piracy. And by 'seriously gotten into' I mean purchasing albums, merch, seeing concerts...I've put a lot of money into music because I had the exposure initially through downloading an album I most likely wouldn't have blind bought for $15.