how bad is music file sharing? – part 2

In his working paper entitled “On-line Piracy and Recorded Music Sales”, David Blackburn used a dataset combining weekly album sales data from Nielsen SoundScan with data of file sharing activity on the 5 largest sharing networks in the U.S. (Kazaa, Grokster, eDonkey, iMesh, and Overnet) provided by BigChampagne over more than 60 weeks between September 2002 and November 2003. The results showed that “(…) file sharing is reducing the sales of ex ante popular artists while redistributing some of these lost sales to smaller, less well known artists” (Blackburn 2004: 41). However, “(…) the aggregate effect of file sharing on sales is quite strongly negative” (Blackburn 2004: 6). “[T]he estimates suggest that a 30% across-the-board reduction in the number of files shared would have resulted in an additional 66 million albums sold in 2003, an increase of approximately $330 million in profits” (Blackburn 2004: 6).

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