Recent research by Wharton professor Joel Waldfogel and Economics professor Rafael Rob has lent some credence to what the recording industry has been saying all along: music downloading hurts CD sales.
The study, published this fall by the National Bureau of Economic Research, tracked the music downloading and CD-buying habits of 412 students at Penn, Hunter College in New York, City College of New York and the Harris School in Chicago.
Though admittedly non-representative, the anonymous collective survey results revealed that every 10 downloads of music could lead to one to two lost CD sales.
"Our tentative conclusion is that people who download buy less. Downloading is part of the explanation for the reduction of sales," Waldfogel said.
College sophomore Katie Lippincott noted that the loss of sales was probably "unavoidable given the increase in technology surrounding music downloads."
However, Waldfogel also pointed out that retailers did not always lose money when people downloaded music illegally. Study subjects apparently valued downloaded music much less than they did purchased music, indicating that they would not likely have spent money to listen to it. In these cases, downloading would not actually hurt the recording industry.
"The record industry could make money off these people if these people could be charged a lower price for the music, instead of lowering the cost for everyone," Waldfogel said.
The authors agreed that it would be hard to come up with a suitable solution to the problem. Instead, they voiced the need for more research into the effects downloading has had on what music gets made and marketed in the first place.
Rather than designing alternate pricing methods for CDs, the Recording Industry Association of America has chosen to sue alleged file sharers and create legislation that broadens the penalties against such defendants.
In particular, the RIAA recognizes college students as a large part of the file-sharing movement.
"College students are some of the most avid music fans," RIAA President Cary Sherman said in a press release. "The music habits and customs they develop now are likely to stay with them for life. It's especially important for us to educate them about the law, the harm suffered by musicians, labels and retailers alike when music is stolen, and the great legal ways to enjoy music online."
Lippincott noted that the artists might not necessarily be getting hurt, as "they get the majority of their profits from concerts and memorabilia."
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