BitTorrent piracy increases sales of ‘leaked’ albums: study

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A new study from a North Carolina State University economist shows that BitTorrent piracy slightly boosts sales of albums that leak onto the Web prior to their official release. The academic evaluation, brought to our attention by TorrentFreak, contradicts claims by organizations like the Recording Industry Association of America (RIAA), which claim that the leak of albums has a detrimental effect on sales of that album, and have made a particular point to go after those who leak albums in the courts.

The study, authored by Robert Hammond, Assistant Professor of Economics at North Carolina State University, focuses on the effect of BitTorrent downloads of leaked albums, those made available for download prior to their official release date, rather than albums that are uploaded to BitTorrent sites after their commercial release. Hammond also focuses only on full album downloads and sales, not individual songs, because full albums remain the primary source of income (74.4 percent, according to the RIAA) for the music industry.

According to Hammond’s findings, leaked albums enjoy a sales increase of about 60 (59.6) units — a tiny number, but in the positive nonetheless — as a “casual” result of BitTorrent piracy.

“I isolate the causal eff ect of file sharing of an album on its sales by exploiting exogenous variation in how widely available the album was prior to its official release date,” writes Hammond. “The findings suggest that file sharing of an album benefits its sales. I don’t find any evidence of a negative e ffect in any specification, using any instrument.”

Hammond also finds that the positive effect of file sharing only applies to well-established, major artists, rather than “new or smaller” artists.

Of course, an uptick of just 60 additional sales is essentially nothing compared to the benefits of other kinds of exposure.

“The effect of radio play is much larger,” writes Hammond. “Specifically, $8,800 worth of airtime… has been found to generate 4,135 additional sales on average. More anecdotally, sales are affected by the so-called ‘Grammy lift’ that follows an artist’s appearance on the Grammy Awards show, including 6,000 additional sales for Arcade Fire’s The Suburbs, 24,000 additional sales for Mumford & Sons’ Sigh No More, and a record-breaking 730,000 additional sales for Adele’s 21. These comparisons suggest that, while I find that file sharing of an album has a positive effect on its sales, those effects are small relative to other promotional efforts that affect music sales.”

Conducted between May 2010 and January 2011, the study compares the the number of downloads and the sales figures for 1,095 albums from 1,075, across a variety of genres. Unlike previous studies on the effects of file sharing on music sales, Hammond uses the number of downloads of albums, rather than the number of total files available via BitTorret, as the basis for his study. All of the download figures come from one of the Web’s “largest” private torrent trackers, though Hammond does not name the tracker he used because of “the illicit nature of the activities of the tracker’s users.”

While Hammond’s findings certainly provide fodder for those looking to argue in favor of online piracy, the evidence does not prove that file sharing is good for music sales as a whole. Moreover, it is likely that the leak of an album from a popular artist — the only category of musician that benefits, according to Hammond — simply serves as additional advertising for the album, rather than there being some inherent benefit to file sharing itself.

Furthermore, Hammond is far from the first academic to study file sharing and music sales — and not a single one has found a positive correlation between file sharing and overall music sales. In fact, a review of past studies on the matter released in 2011 by economics professor Stan Liebowitz found that “the majority of all studies support a conclusion that the entire decline in sound recording sales can be explained by file sharing.” Hammond concedes that his findings do not contradict these past conclusions “because I do not focus on the industry-wide implications of file sharing.”

Read or download Hammond’s study below:

Hammond File Sharing Leak

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