Is File Sharing Really Killing the Music Industry?

From The Future of Music book

There is no direct proof that file sharing itself is hurting the music
industry. Record companies are touting this single-bullet theory to
explain away all the ingrained problems of an antiquated business
reaching the end of its life cycle. Indeed, one can argue that file
sharing is the cheapest form of music marketing there ever was.

Danny Goldberg, Chairman and CEO of Artemis Records, said, "I
don’t think there was any more downloaded song than 50 Cent’s [in
2003], and yet it sold nine million albums. So there were nine million
households that felt, despite the fact that they had seen the video,
despite the fact that they could get it online, that they wanted to
hear the full statement that 50 Cent was making."

File sharing should not be equated with the type of piracy that
is affecting the music industry on a global scale. Traditionally, in
the music business, piracy refers to the activities of organized
criminals who manufacture illegal copies of CDs, DVDs, tapes, and
records, then photocopy the covers and sell the illicit product on the
street for a steep profit. Pirates in many countries run pressing
plants that churn out CDs by the millions without paying the mechanical
reproduction licenses and mechanical license fees to the owner of the
master recordings. The International Federation of the Phonographic
Industry estimates that the number of illegally copied and/or
manufactured CDs increased 14 percent in 2002 and an additional 4.3
percent in 2003, to 1.1 billion units; and worldwide, 35 percent of all
CDs sold are illegal copies. It is estimated that the value of the
pirated music sold amounts to $4.6 billion, and these figures don’t
even include online file sharing or recording of audio streams. In 2002
the global recorded music market declined 7 percent to $32 billion, and
another 7.6 percent in 2003. Leaving file sharing out of the equation,
CD piracy as defined above, could account for the majority of the
decline in CD sales all by itself.

Read more from chapter 3 of the Future of Music here

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