Research: File Traders Buy Records?

By Richard Menta 7/22/02

Jayne Charneski over at Edison Research just passed me on the results of a recent survey they conducted. It confirms much of what we have seen in past surveys measuring the impact of Online music trading over the last few years. It's just the interpretation of that data I'm trying to figure out.

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The team's results came up with the conclusion that three-fourths of 12-17-year-olds do not feel "there is anything morally wrong about downloading music for free off the Internet." They also found that the majority of these young consumers continue to buy CDs. End result, the record industry is missing the boat and thus missing opportunity.

But her interpretations of some her own data struck me as curious, an interpretation that I picked up in the title of the email she sent me "10.1% of 12-17s are actively downloading/not purchasing music". This implied to me this was a negative stat. Doesn't this also mean 90% of file trading teens are both downloading and buying?

Charneski said "What we found were many opportunities for the record industry to combat the downloading problem. For one, we found the majority of downloaders do feel some guilt about downloading music for free. Further, downloaders are more sympathetic to musicians than to the record labels when it comes to compensation".

What sticks in this passage for me is Charneski reference to the "downloading problem". I question that there is a problem. I have been questioning it since MP3 Newswire first went online in December of 1998 and still wrestle with it when faced with valid arguments on both sides.

Most of our music comes for free on the radio. Does that mean there a radio problem (and yes there are execs who feel radio is theft, even as they pump millions in payola to make sure their single gets air play)? My interpretation of Charneski's data and the prior research of others supports the conclusion that Online downloads have promotional effects akin to radio, making it a powerful venue to push, not hurt, record sales. That is the opportunity being missed here. Millions downloaded Eminem's recent album before its release and The Eminem Show went on to become the highest grossing album this year. Does that signify a true problem?

Charneski then comes to these conclusions from her data:

"If the record labels make a concerted effort to get their artists to educate the public about how downloading takes money directly out of the artists' pockets, things may change. Kids have no idea about the amount of money labels shell out to make a record in the first place, but our data suggests it's got to be the artists that explain this. The RIAA should consider redoubling its efforts to get this message out to young consumers via prime time TV, cable networks and the Internet. "

Hmmm....I don't believe I agree with this passage for several reasons. First of all, no one is doing more to take money directly out of the pockets of the artist than the record cartel itself as artist Janis Ian most eloquently expressed on her website in an article entitled The Internet Debacle - An Alternative View, which also appeared in the May 2002 issue of Performing Songwriter Magazine.

Second, today's youth has become quite aware of this industry duplicity and that only makes them angry, not supportive of the record business. Michael Jackson's recent rants against the industry as racist only added to that consumer perception even though he missed the point, because artists of all races are equally abused and victimized by them. As Dave Marsh points out in his recent article "Vincible":

The dialogue about the music cartel's scandalous economics ought to stay focused on the truth, which is one class of people, all relatively poor, being oppressed by another, far richer class. Just as the cotton industry cheated white sharecroppers as systematically and thoroughly as black sharecroppers, white artists and black artists have been identically cheated by the music industry.

Third, Charneski conclusion that since kids don't understand the true cost of making a record, the artists themselves should go out and explain it to them. Will Janis Ian be one of those artists to allowed deliver their opinions "out to young consumers via prime time TV, cable networks and the Internet"? How about Courtney Love?

Also, will any pliant from artists claiming file trading is killing them ring true with a knowing audience, or will they come off as simply corporate shills?

The true nature of statistics is that they can be interpreted to support disparate conclusions. Here are my personal interpretations of Edison Research's results. Feel free to make your own analysis.

*10.1% of 12-17-year-olds who actively download music from the Internet did not purchase a single CD or cassette in the last 12 months.

Or 90% 12-17-year-olds did purchase CDs even though they actively download music from the Internet. In other words, the record industry is having excellent penetration in a market where most of its audience doesn't have a paying job. As for the other 10% can you honestly assume all would have bought CDs if there were no file trading?

At $20 a CD now, I say a good percentage of teens simply can't afford to buy music very often anymore. They will when they can, but frankly many adults of ample means are questioning if a CD is a good value anymore. I'm sure a few teens are too.

*53% of 12-17-year-olds have burned someone else's copy of a CD instead of buying their own copy.

A fact that the record industry will hold up with mock-horror, but in reality means nothing. As Edison Research's previous result shows this hasn't stopped teens from buying. Teens are mostly supplementing their record collection beyond what their personal funds can afford. Remember, record sales went up during Napster's brief existence and the boom in CD burner sales. It has only been in the last year, with the recession, that sales have dropped a modest 5%.

*When it comes to download compensation, teens and young adults are more sympathetic to the plight of musicians than toward their record labels.

As it should be.

*22% of Americans 12-44 years old agree with the statement "You no longer have to buy CDs, as you can download the music for free from the Internet."

And most of that 22% continue buy. That is because CDs are still attractive to consumers. That said, at today's prices when a movie soundtrack can run more than the DVD of the actual movie there are market elements that are more of a threat to sales than file trading.

*The majority of music downloaders do have "some reservations" about artists' and labels' not being compensated but download music for free anyway.

In other words, there is a market who will indeed pay for digital music files online. It just has to be at the right price and under the right terms.

The music industry's two services, Pressplay and MusicNe, have floundered because every track is overpriced, will expire after 30 days unless you pay for that track again (you don't buy tracks here, you rent them), and can't be burned to a CD except under overly restrictive conditions. Needles to say, most consumers passed.

*A majority of downloaders have gone on to buy an artist's CD after downloading a track for free from the Internet.

Many consumers have bought the CD after downloading the entire album. Edison Research doesn't give a percentage to quantify what majority means, but it certainly suggests that there is less of a "download problem" to worry about.

The full press release from Edison research can be read here.



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