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November 24, 2005

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Listed below are links to weblogs that reference The effect of P2P file-sharing depends on popularity:

» P2P as a Long Tail Disruptive Force from ActoNetwork
In this post, Chris Anderson notes that P2P file sharing increases the sales of unknown artists, but decreases the sales of well known artists. From this perspective, P [Read More]

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Or fewer rich stars and more middle class musicians! Here's some of what Chris Anderson posted on his Thanksgiving Day: A fascinating paper from David Blackburn, a Harvard PhD student, on the economics of P2P file-sharing concludes that it does... [Read More]

» Several P2P Economic Surveys from file sharing blog
There are two new studies on the economic and social effects of file sharing, with some predictable results. ... [Read More]

» The Economic Effects Of P2P from Philoneist
A recently published research paper on the economic effects of P2P file sharing espouses the theory that its ramifications are not evenly distributed among all artists; specifically that more popular songs suffer a negative sales impact while less kno... [Read More]

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Comments

julian.bond

I'm not sure shifting left and right is the right way to think of it. Another way is that the power curve is flattened so it falls in height at the left and rises at the right. The big question then is whether the area under the graph changes. If we accept Long Tail analysis that there's gold in the long tail then if you can exploit it, even a small improvement in sales in the tail will more than offset a fall in sales of the peak.

An analysis of all this I'd interested in is the effects of price elasticity. P2P file trading is not zero cost even though it may be zero monetary cost. Search, tidying, bandwidth and time all play a part. There's some price at which buying a good product offsets the effort cost of P2P trading. This is particularly significant for the long tail. If you can get a 192Kb Mp3 for $0.10 per track you'll be much less concerned about wasteing your money and more likely to buy stuff where you have no real previous idea if it's worth it. This actually re-inforces the idea that fixed pricing is wrong. The record companies *should* charge a premium for tracks in the peak where they've managed to create demand. But they should also cut the price dramatically for tracks in the long tail in order to maximise the area under the graph.

There's a further catch in here that doesn't always get mentioned. There is a considerable amount of trading on P2P of tracks that are either out of catalogue and completely unavailable anywhere else. Or where the music has never been released. The whole IDM, electronic dance area is full of this with bootlegs, remixes and private pressings swapped via P2P and completely unavailable anywhere else. So what effect does that have on sales of commercially available music? What if all that stuff was made available as a charged download (again, 192b MP3, no DRM) from a site that provided searching into it? There's a price point where the reduction in effort would mean people would use it.

Barry Ritholtz

Labels remain married to a business model which has little relevancy for most music consumers: Mass produced pop/rap/rock.

The study's findings are very consistent with what I believe the true goal of the recording industry is: To maintain a status quo where fat heads and manufactured pop artists dominate sales.

Most everything the Labels fear from the internet is geared towards the opposite model: widely distributed, many varied artists that have little need of major label machinery. They have their own eclectic following, they self-promote, they garner most of their revenues from performing --not CD sales.

That P2P does not threaten the vast majority of artists only validates that point.


Good luck getting the toothpaste back into the tube . . .

Karmakin

I still say that by going on sales in a post-P2P world you're only seeing part of the story, namely that used CD sales are not counted in any by-artist numbers that I've ever seen.

One thing that I've not seen anywhere is a study on retail CD pricing. From my own experience, it's kind of like a rollercoaster ride. You have moderate prices in the first 6 months, then the prices drop to get rid of the excess stock. Then after 2 years or so, it goes to the "library" at the back of the store where the price jumps substantially (more than a new CD, to be honest)

And it's with that jump where they lose a lot of money to used-CD places, who usually have those CDs in stock, and substantially cheaper (think maybe 25-50% of the price..of newer CDs often you may be paying 75-90%, not so much worth it).

Rich K

Unrelated, but noticed today Johnny Cash, on heels of movie Walk the Line, is the number one artist on Rhapsody, not possible without long-tail-enabling music service.....

Shaye Horwitz

Bottom three quarters? Are you sure? That chart doesn't have figures for 70%, 60%, 51% . . . but 50% was just barely breaking even as it was, while 75% had a fairly substantial difference. Seems more like it helps "just" the bottom half.

Adrian

The benefit on the bottom is quite small, though According to these data, filesharing increases the sales for bottom 75% by 1-3%, while decreasing the sales for top 1% by 20%. Are we even sure than the 1-3% increase is statistically significant?

Hunter McDaniel

Unlimited filesharing may flatten the curve somewhat, but the overall shape will remain. The blogosphere is a good model for what I believe would happen. This simply reflects the re-inforcing nature of fame and reputation.

So we are always going to have big acts - but will they continue to be the product of mass-marketing, which depends of copyright protections to recoup the marketing cost - or will they be arise naturally from word-of-mouth and recommendations from trusted sources? To put it another way - do we need the record companies as intermediaries to filter the good acts from the bad, or are we capable of doing that on our own?

Peter Brunton

In response to Julian Bond's comment, I'd like to point out www.mp3search.ru and www.allofmp3.com, both of which sell tracks at 192BPS for $0.10, or in the region of. AllofMp3 has a particularly interesting price scheme; you choose your format and bitrate, and they make the files for you, then you pay a cost based on how many megabytes you are downloading. Music bought by the kilo as it were. The other interesting feature of AllofMp3 is that it allows you to listen to an entire album as much as you like, but at a low bitrate (24BPS, mono) before buying, completely negating the need for file sharing. Mp3Search goes for the more direct option of charging 10 cents a track and applying a discount when you buy a full album.

Will Page

Artists as price makers, not takers…

Why ….should an artist pay for all the costs of recording the record and then after they've paid for all of that, the record company ends up owning it? Good question to ask when trying to work out what the future holds for the major labels. My response would be that they will be forced to transform themselves into a service for the artist, at the discretion of the artist and paid for by the artist. In short, the artist will move from price taker to price maker as it has been empowered with so many routes to create and distribute music without label assistance. Now, the twist to this particular ‘tail’ is that I feel this is going to happen for hit artists too - like Mick Hucknall (Simply Red) who decided to turn down every major label offer to make his latest album on his own.

Record deals are notoriously one sided, but with sales slumping, the chances of a hit record turning a profit is slim for the label and slimmer still for the artist. I’ve even seen anecdotal evidence of albums which have made it to Number 5 in the UK album charts, yet end up loss making once you’ve factored in the upfront excessive press up of copies and the speed in which sales tail off. Consequently, I think it’s in the interest of artists at the head and tail to consider going solo, own their work, and treating major labels as a service should they wish to do business with them. This will lead to a rapid collapse of the ridiculous contract designs which exist in the industry, like the classic producer being paid off ‘gross’ (with an incentive to overrun) and the artist being paid off ‘net’ (with an incentive to make the record in as short a time as possible).

If anything, P2P has to be welcomes as it will lead to the collapse of a bad business model and make room for the possible construction of a better one …one where the 'incentive' is to make the best record possible, for example.

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nazzy

I used to be of the same opinion, but then I saw this presentation video by Dick Hardt:

steve

share files online without a software client

Contactos

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mark

Try FilesWire.Com
for web based p2p directly in your browser.

Businesses for sale

I agree that the effect is not as awful as recording bosses will have you believe. In a way it does sort of level te playing feild.

I spoke to the director of a small recording studio we once sold through our website Business4Sale.co.uk, and he felt that P2P filesharing had done plenty to help the distribution of his signings.

Nomadesk

P2P file sharing is distinct from file trading in that downloading files from a P2P network does not require uploading, although some networks either provide incentives for uploading such as credits or force the sharing of files being currently downloaded

Ashwaria

P2P file sharing is distinct from file trading in that downloading files from a P2P network does not require uploading, although some networks either provide incentives for uploading such as credits or force the sharing of files being currently downloaded
File Sharing

Batteries

Maybe this will be the year that the Entertainment Industry collectively removes their head from their butt and learns how to embrace rather than fight technology? I'm not counting on it. Smile

They will fight this report tooth and nail and seek to invalidate it in any way they can.

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Tidbits

The Long Tail by Chris Anderson

Notes and sources for the book

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