Study: P2P piracy barely hurts music sales

The longstanding claim of the RIAA that piracy on peer-to-peer networks is the main cause of declining CD sales has always rung hollow to anybody who thinks seriously about music and technology. Even the RIAA itself appeared to retreat in mid-2006, with CEO Mitch Bainwol suggesting that piracy had been “contained,” being balanced out by growth in legal file downloading.

Now comes a study in an academic economics journal, blurbed here by Ars Technica, suggesting that file-trading has had a statistically insignificant effect on CD sales. The study’s authors suggest that tighter controls on inventory (stores can’t just let huge amounts of CDs sit around on the shelf) and the surge in DVD sales (people buying DVDs instead of CDs) are partly to blame. Microsoft tech reporter Paul Thurott weighs in with a dismissive comment that today’s music just sucks, while Zune team member David Caulton wonders if he’s just getting old.

With no evidence but my own subjective impressions gathered from talking with hundreds of music fans and musicians over the last 10 years, I think the problem is a combination of factors that I would basically sum up as “the MBAs ruined it all.”

1. Radio consolidation. Thanks in part to consolidation allowed by the Telecommunications Act of 1996, there’s less local ownership and competition among radio stations today. That’s how you end up with cookie-cutter stations and very narrow playlists all across the country. With playlists squeezed, there’s less opportunity for people to hear new music from the radio, forcing them to learn about new music from reality TV shows, where entertainment value (looks, funny mistakes) are much more important than the sound of the music.

2. Big label conservatism. Rock music fans in their 20s could almost hear the big labels’ business model change around 1995: instead of investing in acts with proven talent–shown by big local fanbases or lots of underground/college radio play or well-regarded releases on indie labels–the companies started pushing junior-level one-hit-wonder bands like Marcy Playground and Third Eye Blind (actually a great song if you listen to the verses) and Harvey Danger. I think part of it was a reaction to the suicide of Kurt Cobain and antiauthoritarian stance of Pearl Jam–why hassle with these serious artists and their complicated personalities when they could find some clone band who they could push just hard enough to make them some money, then discard? Around the same time, they started marketing prefabricated artists like NSync and Britney to the younger kids.

The result? My generation entered our 30s with no connection to any mainstream acts–all the people who loved rock music dove into niche subgenres like jam bands or college radio. And the 90s teens grew up thinking pop music was disposable crap anyway, and entered their 20s with little interest. Meanwhile, technology progressed to the point where anybody could get music for free. If you’ve spent the last five years showing your audience that music’s a disposable commodity, how are you suddenly going to compete with free?

(I am not a huge hip hop aficionado, but seems to me that hip hop was more vibrant during the mid-90s, and remains more lucrative today, but the same pattern of gradual decay appears to be repeating itself with about a five-year delay.)

3. Competition. The authors of the study are absolutely correct that there’s more competition for consumers’ entertainment dollars today, but it’s not just DVDs: I actually think video games are a huge factor. When I was in college, I stayed up all night waiting in line for Who tickets. Now, kids wait in line for Halo 2.

4. Concert ticket prices. Speaking of waiting in line, you think any college kids are planning on going to The Police reunion tour? When tickets start at $100 and good seats cost $225? I’m starting to see some indie rock acts, like Death Cab for Cutie and The Shins (both of whom bore me within an inch of my life) touring with reasonable ticket prices, but for the most part there’s a huge gap between local club acts, which cost between $5 and $25, and big concerts, which usually cost no less than $60. Going to big shows used to be an important community bonding experience, a shared way of reinforcing the idea that music really matters. By cutting young generations out of this experience, the concert industry (promoters, venue owners, and Ticketbastard as much as the greedy artists) essentially dug its own grave.


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