"There's no minimizing the impact
of illegal file-sharing. It robs songwriters and recording artists
of their livelihoods, and ultimately undermines the future of music
-- Cary Sherman, president of the Recording Industry Association
of America, in an op-ed piece
last year in USA Today
"It's called stealing."
-- Lars Ulrich, drummer for Metallica, testifying before Congress
in 2000 about music file-swapping
on the Internet
Your Unconventional Wiz stands second to no one in the belief that Metallica Rules! But it's my duty to report the findings of a new study that suggest that Ulrich, who led the fight to close down the Napster file-sharing service, music association exec Sherman and a small army of music millionaires are probably wrong when they predict dire consequences from the ubiquitous practice of downloading music for free from the Internet.
Downloading music has no appreciable impact on CD sales, assert economists Felix Oberholzer-Gee of the Harvard Business School and Koleman S. Strumpf of the University of North Carolina in a paper presented last month at a conference in Cambridge, Mass., sponsored by the National Bureau of Economic Research. (It may be the only scholarly paper that formally acknowledges "aural support" from the music groups Massive Attack, Sigur Ros and the Mountain Goats. "Of course, we bought the CDs" and didn't swipe them off the Net, Oberholzer assured us.)
If anything, the two scholars claim, downloading tunes may actually increase sales of popular CDs and more broadly benefit the music industry by introducing listeners to music they would not otherwise hear or buy.
They reached those conclusions after doing a meticulous study of the relationship between downloads and CD sales. They obtained information on 1.75 million file downloads completed over the OpenNap file-sharing network during a 17-week period in late 2002. Their data included information on the artist and song being swiped -- er, downloaded. Then they analyzed album sales during the same period from data gathered by the music division of Nielsen Entertainment (the ratings folks), and compared how downloads affected sales of rock, rap, rhythm and blues, country, jazz and Latin music. In particular, they wanted to see if an increase in downloading was followed by a decline in CD sales.
It wasn't. "We find that file-sharing has no statistically significant effect on purchases of the average album," they reported, noting that downloading, at worst, "can explain a tiny fraction" of the decline in album sales.
Even their most pessimistic estimate suggests that it took 5,000 downloads of a song to cut CD sales by a single copy. And for some CDs, downloading apparently created a buzz that promoted sales.
"High-selling albums actually benefit from file sharing," they wrote. For every 150 downloads of a song from those albums, sales increased by one copy, according ot their findings.
How do they know that downloads increased sales, and not the reverse? They used a sophisticated statistical technique that allowed them to determine which was the cause and which was the result.
The study comes at a time when complaints about the Internet's impact on the music biz have never been louder. The number of music CDs shipped between 2000 and 2003 fell from 940 million to 800 million -- a 15 percent drop.
And it's not just rockers who are swiping music. Last year, the sales of Christian music albums fell by 5.2 percent -- a direct result of downloading, asserted John Styll, president of the Gospel Music Association. "I'm surprised and disappointed that the behavior isn't that ardently d ifferent between Christians and non-Christians," Styll told a reporter for the Dallas Morning News in April.
So professors, if the Internet is so good for music, why are CD sales plummeting? These economists aren't sure, but they have some hunches -- including a sour economy, the standardization of radio play lists that limit airplay of new or unfamiliar performers, a reduction in the number of albums released, the skyrocketing cost of CDs "and possibly consumer backlash against record industry tactics."
Here's another possibility: The music is awful.
Everybody knows that what the president says can move the stock market up or down. Now it seems that even the utterances of presidential candidates can prompt spurts of buying or selling of certain types of securities.
Accounting professors Ben Ayers of the University of Georgia, C. Bryan Cloyd of the University of Illinois and John R. Robinson of the University of Texas collaborated on a study to see whether securities prices react to the tax rhetoric of candidates.Their study focuses on the 1992 race, which pitted Republican incumbent George H.W. Bush against Democratic challenger Bill Clinton. These professors reasoned that if investors believe a new administration will increase taxes on dividends from stocks -- as Clinton had proposed -- stock prices would drop while the price of tax-exempt investments like municipal bonds would increase.
That's what happened, Ayers and his research team found. As it became more likely that Clinton would win and his tax proposals would be enacted, investors and securities prices reacted accordingly: Over the course of the campaign, stock prices went down by about 1 percent and municipal bonds went up by about 4 percent. Of course, stock prices are influenced by many factors -- and talk on the campaign trail, the researchers found, is one of them.
Forget Red and Blue America. This election year, think Giddy Republicans and Gloomy Democrats.
From the economy to Iraq to terrorism, self-described Republicans are positively buoyant about what the future will bring while Democrats can only see dark clouds ahead, according to a Washington Post-ABC News poll of 1,201 randomly selected adults.
The survey asked respondents whether they were optimistic or pessimistic about four specific subjects: the direction of the country, the situation in Iraq, the economy and the country's ability to defend itself against terrorist attacks.
Then your Unconventional Wiz, ever the cockeyed optimist, created a scale that measured how many times the respondent gave the "optimistic" answer to each of the questions. Then the data were analyzed to see how different groups rated on the optimism scale.
For Republicans, it's morning in America: A healthy majority -- 57 percent -- of Republicans gave upbeat answers to all four questions. One in 10 were optimistic in only one or none of the four areas covered.
For Democrats, it's twilight. About one in five were consistently optimistic in response to all four questions, while four in 10 were feeling good about only one or none in the areas covered. As for political independents, it's mid-afternoon. More than a third scored at the very top of the optimism scale, but a third were as dismal as the Democrats about the country's prospects over the next 12 months.
The telephone poll, conducted June 17 to 20, had a margin of sampling error for the overall results of plus or minus 3 percentage points.