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Here we'll explore the nexus of legal rulings, Capitol Hill policy-making, technical standards development, and technological innovation that creates -- and will recreate -- the networked world as we know it. Among the topics we'll touch on: intellectual property conflicts, technical architecture and innovation, the evolution of copyright, private vs. public interests in Net policy-making, lobbying and the law, and more.

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April 12, 2004

Felten, Boorstin and Filesharing

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Posted by Ernest Miller

Ed Felten on Freedom to Tinker hypothesizes a melding of several studies on file-sharing, creating A Grand Unified Theory of Filesharing. Copyfight noted the study here: Felten's Grand Unified Theory of File-Sharing. Felten divides the filesharing world into younger (15-24 years old) Free-riders (who fileshare and don't later purchase music) and older (25+ years old) Samplers (who fileshare to sample, but later purchase music).

However, while Felten's generational distinction is an important one, I'm not sure his theory fully explains what is going on. The main problem I see is that Eric Boorstin's thesis (Music Sales in the Age of File Sharing), which found that internet access correlates with increased music purchases for older people but decreased music purchases by younger people, isn't really about file sharing per se. The disconnect here is that there is no data for the correlation between filesharing and internet access.

Read on...

In the "caveats" of his results section, Boorstin claims that:

However, it is highly unlikely that none of the measured effect of Internet access on CD sales is due to file sharing. There are many ways in which Internet access might affect CD sales, but the online activity that is by far the most directly related to the music industry is file sharing. On the negative side, MP3s are the nearest substitutes for CD purchases. On the positive side, the best way to learn about new music is to download that music. My results strongly correspond to the theoretical arguments and available survey information about the different file sharing effects of different demographic segments. Thus, file sharing is the likely explanation for my results.

Filesharing is one likely explanation, but not an exclusive explanation.

For example, older people use filesharing software much less than younger people. "File sharing is heavily skewed to youth. While a majority of Americans under eighteen have downloaded and half of those are heavy users, only a fifth of those aged 35-44 have downloaded files (Edison Media Research, 2003)." (The Effect of File Sharing on Record Sales: An Empirical Analysis [PDF] by Oberholzer and Strumpf). If this is so, then it may be that while internet access increases music sales in general, use of filesharing software decreases music sales across all demographics. Since older people have more access to the internet, but don't fileshare nearly as much, the overall result shows older people buying more music. In contrast, as younger people are more likely to use filesharing software, the positive effect on music sales of internet access is outweighed by the negative effect of using filesharing software.

Of course, this wouldn't be the only factor to distinguish between younger and older internet users (for example, the fact that older people tend to have more disposable income would likely have an impact), but it could be a significant one.

Boorstin found that increased internet access correlated with increased CD sales, not that increased filesharing use correlated with increased CD sales. I know that the internet (absent filesharing) increased my CD purchases, mostly due to convenience. Amazon is a great way to immediately buy CDs, either as an impulse purchase ("Oh, yeah, I should buy that album" - click, buy) or to sample music before purchase without downloading (many CD sale websites allow users to sample 30 secs. of streaming music or so). I've also purchased CDs from bands whose music I downloaded from the band's website (which doesn't really count as filesharing, I think). Obviously, my experience is anecdotal but, as Boorstin's research shows, internet purchases have increased substantially despite an overall decrease in music purchases.

It would also be interesting if Boorstin would revisit his numbers taking into account not simple internet access, but broadband access. I'm not sure what the results would be, but they might be illuminating if, for example, broadband access was correlated with increased or decreased music sales in comparison to dial-up access. Basically, to really understand what is going on, more statistical information is needed regarding filesharing.

Of course, as Felten notes, even if we knew what is going on today, it wouldn't necessarily be clear where the future leads.

Comments (3) + TrackBacks (0) | Category: Counterpoint


COMMENTS

1. Cypherpunk on April 12, 2004 11:53 PM writes...

That's a great point about broadband. I'll bet that BB correlates well with file sharing. Not only is BB pretty much a necessity for file sharing to be practical, file sharing is also one of the few applications that actually justifies the additional expense of broadband.

My wife falls into the "older" category, but she does a lot of file sharing. She's always loved music and used to buy several CDs a month, but hardly ever buys them any more. I was asking her earlier tonight if her experience was typical, or did she know people whose file sharing had actually caused them to buy more CDs. I'm always hearing people say this online, and I wanted to know if it was consistent with what she sees.

Actually, she didn't know anyone else who used file sharing! Among our elderly peers, she's unusually sophisticated in her net use, at least as far as getting music online. So this is another anecdote that is consistent with your theory.

Permalink to Comment

2. Ed Felten on April 13, 2004 6:29 AM writes...

Your argument that Internet usage drives CD sales because CDs are easier to buy online seems very plausible. This may account for some of the correlation between Net usage and CD buying. But it doesn't explain why Eric Boorstin's data show such a disparity by age-group.

The quote saying that filesharers are disproportionately young is based on survey results. Recall that my theory predicts that survey-based studies will overcount young filesharers. A key question, which I don't know the answer to, is how the demographics of filesharers compare to the demographics of CD buyers. My guess, based on anecdotal evidence, is that older people buy fewer CDs than younger people.


Permalink to Comment

3. Ernest Miller on April 13, 2004 8:49 AM writes...

Your theory may predict an overcount of young filesharers, and that may be correct, but we really don't know by how much. I rather suspect that there are many more younger filesharers than there are older ones, even though the figures from the study I cite may be skewed somewhat.

We do need more information about the demographics of CD buyers and how this correlates with their purchases via internet. It may be that while older people purchase fewer CDs overall, they are more likely to purchase via the internet than younger people. There may be several reasons for this: greater access to credit cards; prefer to purchase music that isn't always readily available via big chains; and are more willing to wait for mail delivery.

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