The first “Vienna Music Business Research Days” in retrospective

At the first “Vienna Music Business Research Days” from June 9-10, 2010 at the University of Music and Performing Arts Vienna, economists and music professionals focused on music file sharing as well as on content flat rate models (“cultural” flat rate). In workshops, key notes and panel discussions recent research results were presented and controversially discussed.

List of participants in alphabetical order: Electric Indigo (DJ & musician, Vienna), Eric Garland (CEO BigChampagne, Los Angeles), Philip Ginthör (General Manager Sony Music Entertainment Austria, Vienna), Peter Jenner (music manager and music producer, London), Stan J. Liebowitz (Professor, University of Texas at Dallas), Richard Mollet (The British Recorded Music Industry – BPI, London), Felix Oberholzer-Gee (Professor, Harvard Business School), Peter Tschmuck (Professor, University of Music and Performing Arts, Vienna), Carsten Winter (Professor, University of Music and Drama, Hannover).

Workshop on June 9, 2010

Professor Oberholzer-Gee (Harvard Business School) discussed with participants of a methodological workshop different approaches to measure the impact of file sharing on music purchases. He concluded that most of the studies rely on non-representative samples, questionable surveys of college students , and on insufficient instrument variables for file sharing such as Internet penetration. All these methods, according to professor Oberholzer-Gee, do not lead to valid results. Thus, the most reliable methodology is to collect data directly from the usage of file sharing networks. However, these studies use data from the early years of file sharing after the emergence of Napster, which are outdated and not representative for the current situation of music file sharing. Therefore, we need new representative studies on music file sharing at least for the largest markets, which combine quantative as well es qualitative methods in order to measure and to understand the phenomenon of file sharing usage.

Discussion: “How Bad is Music File Sharing?” on June 9, 2010

In the evening of June 9, 2010, Felix Oberholzer-Gee (Professor, Harvard Business School) and Philip Ginthör (General Manager, Sony Music Entertainment Austria) controversially discussed the question “How Bad is Music File Sharing?”. Whereas Prof Oberholzer-Gee advocated the legalisation of file sharing and a fundamental reform of copyright, Philip Ginthör spoke up for a strong copyright protection of rights’ holders and for graduated response (aka “three strikes”) models, which are already implemented in some national legislations.

You can find a detailed summary of the disussion (in German) at ORF Futurzone: “Filesharing und der Neustart der Musikindustrie”

Here you can listen to the live-stream (in German) of the disussion.

File Sharing Research and Content Flat Rate Models on June 10, 2010

The second conference day was opened by Peter Tschmuck (Professor at the University of Music and Performing Arts) with a literature overview of 23 music file sharing studies, which come to contradictional results. Whereas the majority of works identifies a negative impact of file sharing on record sales/purchases, there are also studies that cannot find any statistically significant impact or even a positive one. Peter Tschmuck highlighed that the reason for the divergent results are the use of different terminology. Some authors speak of “piracy”, whereas others use terms such as “file sharing”, “downloading”, “unauthorized copying”, “free music consumption”, etc. Since these terms denote different phenomena, this might help explain why the research results differ so dramatically. Also, the impact is measured on different bases: record sales, music sales, or purchases. However, the most important reason for the contradictional research outcome is the use of different methodological approaches ranging from pure theoretical over primary or secondary data based survey approaches to studies relying on the direct measurement of file sharing usage.

A detailed summary of Peter Tschmuck’s speech can be read on heise.online and in c’t magazine: “Wissenschaftler: Studien über Tauschbörsen unbrauchbar”

For download: PowerPoint presentation and conference paper “The Economics of File Sharing. A Literature Overview”

Live-stream of the presentation and following discussion

In the next presentation Professor Stan J. Liebowitz (University of Texas at Dallas) tried to point out that file sharing dramatically harms music sales/purchases and criticized Oberholzer-Gee’s and Strump’s study that was published 2007 in the Journal of Political Economy. He argued that the key instrument variable (German school holidays) is highly problematic and dramatically biased the regression results. The discussion with the audience was opened by a vivid argument between Prof. Liebowitz and Prof. Oberholzer-Gee, before the audience joined with questions and remarks.

For download: PowerPoint presentation and conference paper “What Do Careful Examinations Reveal About the Impact of File Sharing?”

Live-stream of the presentation and following discussion

After lunch Professor Felix Oberholzer-Gee (Harvard Business School) presented his research results of file sharing indicating that there is no statistically significant impact on music purchases. In a review of several music file sharing studies, Professor Oberholzer-Gee tried to highlight which methodology provides more or less valid results. He, therefore, concluded that those studies, which measure directly P2P file sharing usage. On this empirical data basis Professor Oberholzer-Gee pleaded for a fundamental reform of copyright.

An interview with Prof. Felix Oberholzer-Gee is available at ORF Futurezone: “Filesharing: Die wundersame Musikvermehrung”.

In ArsTechnica blog there is a detailed summary of Professor Oberholzer-Gee’s findings: “File-sharing has weakened copyright—and helped society”

For download: Conference paper

Live-stream of the presentation and following discussion

In his presentation Eric Garland (CEO BigChampagne) showed that number of file sharing users reached an all-time high in 2009 world-wide as well as in the U.S. According to Garland, P2P file sharing networks and “one-click” hosting sites generate ten times more downloads than legal music download services on the Internet. In addition, he identified a chance from album to a track culture, in which “cherry picking” of songs dominated the music consumer behavior. Thus, two songs per artists are downloaded on average by a single user, whereas albums barely find music lover although they are freely available on the Net.

An interview with Eric Garland is available on ORF Futurezone: “Filesharing wird effizienter und schneller”

For download: PowerPoint presentation and Paper 1 as well as Paper 2 “Statistical Trends in Music File Sharing”

Live-stream of the presentation and following discussion

In the final panel discussion on “Pros and Cons to Music Flat Rate Models” Electric Indigo (DJ & musician, Vienna), Eric Garland (CEO BigChampagne, Los Angeles), Peter Jenner (music manager and music producer, London) and Richard Mollet (The British Recorded Music Industry – BPI) exchanged their divergent points of view.

A summary is available at ORF Futurezone: “Viele Hürden für die Musik-Flatrate”

Live-stream of the panel discussion

Media response

Austrian Press Agency (APA), June 8, 2010: “Erste Wiener Tage der Musikwirtschaftsforschung”

DerStandard online, June 8, 2010: “Böse, aber wie böse genau?”

ORF Futurezone, June 8, 2010: “Musiktausch und Musikgeschäft”

ORF Futurezone, June 10, 2010: “Filesharing und der Neustart der Musikindustrie”

heise online, June 11, 2010: “Musikbranche: Wessen Bier ist das?”

heise online, June 11, 2010: “Wissenschaftler: Studien über Tauschbörsen unbrauchbar”

ORF Futurezone, June 11, 2010: “Viele Hürden für Musik-Flatrate”

ORF Futurezone, June 14, 2010: “Filesharing wird effizienter und schneller”

Ö1 Digital.Leben, June 15, 2010: “Illegale Downloads: Wie böse ist Filesharing?”