By Richard Menta 5/08/03
In the latest research on file traders Nielsen/NetRatings has again found that those who trade music for free on the Net also buy music. The company polled 36,000 Internet users and found that of those who downloaded music in the last 30 days, 71% bought music in the last three months.
It goes further than that. In some genre's those who trade are MORE likely to make a purchase than those who don't, an interesting insight.
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Case in point, file traders were 111 percent more likely to buy rap music than Net users who hadn't made any file trades in the last 30 days. That alone says a lot about the supposed promotional powers of file trading.
This supports events that, contrary to record industry rhetoric, suggested file trading had significant promotional effects. One of the first we wrote about happened three years ago as described in our article Did Napster Take Radiohead's New Album to Number 1?
This also supports Ipson-Reid's research last fall that found file traders who swap tunes for free are also open to paying for digital downloads.
So what does this really mean to the record industry. The same thing that Apple's success with selling digital files over the Net means. Just another example of the opportunity cost endured by the industry's past decisions. In other words the opportunities lost by not embracing digital downloads as a viable product, one that we have now confirmed the industry could have profited significantly from as early as the late 90's had they not instead tried to dismantle it.
It turns out they were profiting from it all along, just not to as high a level as it could have been. Essentially, all this time, the industry has been only hurting itself (something the MBA in me sees as the ultimate failure in business vision as it could have offset competition from DVD sales and a recession) and I hope they think about this the next time they ask the FBI to raid some college dormitories.
For more info on this check out CNET's article.
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