Since peer-to-peer file sharing became popular in the late 1990s, the music industry has been uncompromising in its opposition to network song swappers, maintaining that music downloads are illegal and hurt record sales.
The draft of a study examining the effects of file sharing on record sales suggests otherwise.
Harvard Business School Prof. Felix Oberholzer-Gee and Koleman Strumpf, an economics professor at the University of North Carolina, found file sharing has little effect on record sales and the economy.
"Even in the most pessimistic specification, 5,000 downloads are needed to displace a single album sale," the professors wrote. "We also find that file sharing has a differential impact across sales categories. For example, high-selling albums actually benefit from file sharing."
Strumpf said the survey was conducted by gaining access to a log file from the OpenNap file-sharing network and matching song file name downloads to the sales of popular albums. The professors examined the relationship between sales of albums and downloads of individual songs over a period of four months in 2002 to see if a loss in sales existed in comparison to the downloads.
A six-page memo released April 2 by the Recording Industry Association of America criticized the study's methods.
"It is not possible to examine record sales and downloading for 17 weeks and determine whether or not downloading has harmed sales over the last three years," the memo said. "It is like noticing that the sky is clear and concluding that this has been the sunniest decade in history."
In response to the RIAA's statement, Strumpf said there is additional evidence from other sources supporting the claims made in his study.
"The first quarter this year, downloading has hit an all-time peak," Strumpf said. "Sales have been up nine percent this year. There is more and more evidence that is corroborating our results."
Strumpf also criticized the RIAA's methods of gathering evidence to determine that file downloads harm music sales.
Strumpf said the music industry assumes that since file sharing has increased in recent times and album sales have decreased, consumers are substituting music purchases with file sharing. He argued that other confounding reasons may contribute to this trend.
"Cash constraints are driving people to buy fewer albums and to do more file sharing," he said, adding that some people who seek free downloads are not able to afford albums in record stores.
Strumpf also said the music industry employs random telephone surveys to determine if downloads substitute album sales. He added the results of these surveys are "suspect" since the industry is asking survey responders to admit to potentially illegal behavior.
"You can't drive causality from these surveys," Strumpf said. "If you find 50 guys that say, 'The sun revolves around the earth,' it doesn't make it so."
The survey has faced criticism from scholars around the nation.
Stan Liebowitz, an economics professor at the University of Texas at Dallas, has openly questioned the professors' conclusions.
"I have trouble believing that everything works out the way they say it does," Liebowitz said. "There are too many questions."
Liebowitz criticized the professors' method of collecting data. He said many American downloads came from foreign sources, particularly Germany, and the behavior of German schoolchildren offering the shared files during the study may have changed as a result of school holidays.
"It would be like assuming everyone in Germany takes a deep breath and it would have an impact on our breathing," Liebowitz said. "If there is no scarcity in downloads, their story falls apart."
Strumpf defended his study.
"Stan doesn't like our approach -- he doesn't find it very persuasive," Strumpf said. "I've talked to lots of other people, and they sound very convinced. I welcome future debates on the merits of our studies."
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