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March 24, 2011

CNET (and others) Get It Wrong, Miss the Actual Story

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Posted by Alan Wexelblat

I've been avoiding writing about the LimeWire debacle, not least because of potential conflict of interest (*). As always, I speak for me and nobody else. Not Corante, not my company, and certainly not Gorton or LimeWire.

With that out of the way, let me just say: CNET, you're wrong. Your headline writer is wrong, and Greg Sandoval (whom I normally think better of) is wrong. Allow me to demonstrate.

The headline is "LimeWire demise slows music piracy." And Sandoval faithfully repeats the claim of research firm NPD Group that

the percentage of Internet users who download music via peer-to-peer services was at 9 percent in the fourth quarter of 2010, compared to 16 percent in the same period earlier in 2007

Well, that certainly seems significant. In the three years since LimeWire was shut down, fewer people admit to shar... wait, you mean LimeWire wasn't shut down three years ago? Err, no. It wasn't. It was shut down in October of 2010. So approximately 2.5 months worth of LimeWire absence was included in the period measured, out of a total of 36 months. For those bad at math, that's less than 10% of the time.

The claim, then, is that an event that happened in the last 3 months of a three year period somehow caused a retroactive drop? Either that violates causality as I understand it, or someone in the P2P industry has invented time travel and isn't sharing it. Or maybe, NPD is full of shit and Sandoval is guilty of just repeating what he's told rather than thinking for himself.

To cut NPD a small amount of slack here, they do admit that former LimeWire users are moving to other sharing networks. But really, this is just marketing puffery. NPD has no idea what caused the drop in self-reported file sharing over the past three years. Maybe it was that people thought it was an increasingly bad idea to admit that they used LimeWire to random marketers when there was a relentless stream of bad headlines about LimeWire.

Or maybe - and here I think is where there's an interesting story Sandoval might have written - people are sharing music by new means. Look, for example, at music-sharing via Twitter, or how about a video that's over a year old telling people how to share music on social networks?

I found the above two links in under 15 seconds of "research". Were I an actual paid reporter - as Sandoval purports to be - I would have done some actual research (which is different from "market research" puffery issued to please a paying client) and found out more about where the music sharing has gone. P2P networks still have significant traffic in copyrighted files. But YouTube and Twitter and other "Web 2.0" sites have picked up an enormous amount of the slack.

And were I an actual paid reporter, I might have dug into what I think is possibly the most interesting music-sharing story of 2011, which is that people aren't downloading music as much anymore, but they're sharing it more than ever. Streaming music, both legal and illegal, is finally taking off in a big-time way. People no longer feel as much need to have their own copy of an MP3 on their disks because they're confident they can be connected all the time to a network that will supply them the sounds they want when they want it. Between broadband penetration to homes and a proliferation of pocket devices (mostly calling themselves cell phones) that have the ability to stream low-bitrate MP3s or better, we are likely to see the local storage of media go the same way as email has gone in the past decade. And that will impact old markets like P2P networks far far more than yet another sharing company shut down by the Cartel.

I hope to be writing more about this in the rest of this year.

(*) In my day job I work for a company in which Mark Gorton is a major stakeholder. I've met him twice at company parties. He has no impact on my livelihood directly, but the case against LimeWire has affected all the companies in which Gorton is invested. So there's a potential conflict that readers should know about when they consider my writing.

Comments (7) + TrackBacks (0) | Category: Counterpoint


1. Ninja on March 24, 2011 11:31 AM writes...

Yes sir. Despite of any bias your connections might have this article points aspects that must be addressed. I don't believe 12 million ppl didn't spend 10 seconds googling for alternatives.

You could post an article about how Limeware shutdown impacted all the companies Gorton had any part in. We'd also love to hear about how many jobs were lost. MAFIAA claims that piracy costs thousands of jobs to the economy (yes, as if they are gonna hire thousands of employees). It would be interesting to see how many jobs MAFIAA is taking away with their actions.

Permalink to Comment

2. DrWex on March 24, 2011 1:02 PM writes...

I don't think it's possible to quantify the effects of the lawsuit on other companies. LimeWire itself was shut and a couple hundred people worked there. I don't have a view into the other things that Gorton runs or funds (e.g. Streetsblog).

Permalink to Comment

3. Peter da Silva on March 25, 2011 2:16 PM writes...

If a precis of the study only reports two data points, you can't conclude that the drop occurred over the entire period, all you can conclude is there are two data points. Without intermediate data points you don't know if the figures were steady until three months ago, or steadily dropped over the past three years, or dropped three years ago and then held steady, or even increased until a year ago and then started dropping...

What's the original study say? Well, if it was from NPD, you probably have to pay several thousand dollars to see that. Pity.

Permalink to Comment

4. Blaven on March 25, 2011 5:11 PM writes...

An earlier press release from NPD Group seems to undercut exactly what they are talking about here. On 3/31/09 they released a report that says, among other things:

“…teens (age 13 to 17) acquired 19 percent less music in 2008 than they did in 2007. CD purchasing declined 26 percent and paid digital downloads fell 13 percent compared with the prior year. In the case of paid digital downloads, 32 percent of teens purchasing less digital music expressed discontent with the music that was available for purchase, while 23 percent claimed to already have a suitable collection of digital music.”

“The downturn in paid music acquisition was matched by a downturn in the quantity of tracks downloaded from peer-to-peer (P2P) networks, which fell 6 percent in 2008. The number of teens borrowing music, either to rip to a computer or burn to a CD, fell by 28 percent.”

“NPD’s music tracking surveys noted sharp jumps in teen’s usage of online listening sources and satellite radio in 2008. More than half of teens (52 percent) listened to online radio in 2008, compared to just 34 percent in 2007. Downloading or listening to music on social networks also saw a large increase – from 26 percent in 2007 to 46 percent in 2008; satellite radio listening among teens increased from 19 percent in 2007 to 31 percent in 2008.”

Their own study would indicate that the decline in illegal downloads started as early in 2008 and was matched by a decline in paid downloads and CD sales, and had more to do with the rise in online radio than anything else.

Permalink to Comment

5. Rich on March 25, 2011 9:54 PM writes...

Now that just about every song is on YouTube, who needs to download anything? I bet almost the entire drop can be attributed to YouTube and increased legal mp3 sales.

Permalink to Comment

6. Joly MacFie on March 26, 2011 3:18 PM writes...

I think Rich has a fair point. My guess is that society is beginning to approach the asymptotic saturation point for legacy media data files. There was a lot of catching up and hoarding. It was a fad. Now people are too busy tweeting, facebooking etc to bother.

Permalink to Comment

7. Alan Wexelblat on March 27, 2011 6:23 PM writes...

@blaven nice catch. Too bad CNET couldn't have done a little more legwork.

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