Internet usage for file sharing has in the recent times being on the rise. With the increasing number of internet users, file sharing is inevitable. The sharing of files through the internet has sparked heated debates due to its adverse effects on the music industry. Low sharing cost is perhaps the main cause of file sharing across the continent. Controversies between the copyright owners and the internet sharing technologies have resulted in intense debates bordering on the effect of file sharing. The essay focuses on the effects of increased file sharing on the sales and revenues of the music industry.
The increased lawsuits and the intense debate in the public domain has prompted research to be carried out in the music industry. From such studies, it has been found that internet sharing of files affects the music industry. The act of file sharing over the internet brings some harm to copyright owners, but also there have been shown to have negligible adverse effect on the sales made. When there are over one billion downloads per month of the music files in the US alone, these have been argued not to replace the purchases of music from the legitimate market as argued by the music industry. Some researchers argue that the uses of the downloaded files do surpass the purchase of the original music, and they work to promote the purchase of the originals due to their ability to popularize the music. This is in line with the results estimated by the use of ordinary least squares. In this line of thought, it is also argued that music downloading and sharing works like a sample of its users from which they select the music that pleases them and then makes purchases of the original files. The argument raised in this case is that internet file sharers and downloaders do so for the sole purpose of selecting the music for which to acquire the original copies. (Oberholzer-Gee & Strumpf 37).
In the year, 2000 there was recorded massive decline of sales in the music industry, Soundscan and RIAA, which are responsible for measuring this, recorded an enormous drop in sale around this year. The huge drop coincided with the invention of the Napster, a program allowing the internet sharing of music files. The birth of the internet file sharing quickly gained popularity and gathered millions of users to adopt it. It was at this time that an enormous decline in the music industry sales was reported. The simultaneous occurrences clearly indicate the relationship of increased internet file sharing and reduced music sales that are; internet file sharing is responsible for the reduction of original music copies. The music industry mainly base their arguments on such declines to point out that internet file sharing has nothing, but adverse effects on the economic aspect of the music industry. Further support of the allegation that file sharing negatively affects the sales, and revenues from the music industry were provided by the 2004 results from the sales made in the music industry. Sales for this year showed an increase from the previous year’s decline; this is associated with the lawsuits that was filed seeking to stop the internet file sharing resulting in a decrease in file sharing. This reduction in internet file sharing and increase in sales revenues was an evidence that file sharing affected the music sales and earnings (Liebowitz 27).
Economists have also shown that the potential and perhaps already felt impacts of file sharing and downloading is that in many cases shared and downloaded copyrighted files eliminate the need to buy the original works. Substituting the original file with downloads and shared files directly and negatively affect the sales of the music industry and consequently lower the revenues received. This is in support of the argument that internet sharing of files is harmful to the sales and revenues of the music industry.
Another argument raised by economist regarding the effects of internet file sharing in the music industry is that file sharing may have network effects towards music listening. The above graph shows the analysis by of trends in sales over the years in the music industry.
Source: (Liebowitz, 2008)
The increased internet usage and penetration for entertainment purposes cause a reduction in usage of television and radio. Initially, the radio and the television were the primary sources of entertainment for the people and the main way through which music industry advertised its products. The two media devices acted as the sources of music samples from which the listeners and viewers could choose the music that matches their tastes and then purchase the original copies of the music. With the increased internet usage, music was not sampled and marketed as in the radios and the television where an individual did not remain with the copy of the song, the internet allowed the users to download music at a very low cost and share it among other users. This habit saw the decline of the music sales by a large extent exemplifying the harm that internet file sharing caused by the music industry sales and revenues.
The internet file-sharing habit has been cited to have positive effects on sales and revenues in a music industry. They argue that internet file sharing is not the cause of the decline in the sales and revenues reported by the music industry and that other factors other than file sharing are the causes. It is argued that the inferior and poor sound quality of music downloads deters people from preferring and substituting shared files to the original copies. Internet shared music does not carry features like the liner notes or have the cover art that comes with the original copies of the music. Due to lack of this features people do not substitute it with the original copies and often use these downloads as marketing venues from which they get to learn about the music and go out to buy the original copies of the music that pleased them.
Those disputing the music industry claims that internet sharing of files negatively affected its sales and thus reducing the revenue; argue that internet file sharing creates a platform through which people can discuss a particular form of music. In the discussion, people happen to learn about any new music or one they were not aware of from the past. From this discussion and the knowledge acquired of new songs or one that a user is interested with, original copies of the music files are bought. This shows that the internet file sharing process is not used to replace the need to buy the original copies, but rather as a site for advertising any music. Therefore, the sales of the music industry are increased by internet file sharing as opposed to the music industry claims of adverse effects from the internet usage (Liebowitz 855).
Internet file is sharing present another option besides purchasing of the original music album. The music industry while bringing out the adverse effects sharing of files has on the sales, and hence the revenues argue that the user can download or get the music free.
One negative effect associated with file sharing is that it reduces the cost of the music as compared to what is offered in the sale of the original copies. However, looked from a different angle the reduction in the price of music copies should not be given as a reason for the declined sales and revenues of the music industry. This is because with reduced prices comes increased purchases, even people who could not initially afford the music albums can buy at the low prices. Increased number of customers results in higher revenues. Hence, file sharing does not have the adverse effects portrayed by the music industry in many of its campaigns against the practice, but positive impact on the sales and revenues of the industry (Rainie 76).
Work cited
Oberholzer-Gee, F., and K. Strumpf. "File sharing and copyright." 10.1 (2010): 19-55. Web. 30 Nov. 2014.
Liebowitz, S. J. "Testing File Sharing's Impact on Music Album Sales in Cities." Management Science 54.4 (2008): 852-859. Web.
Liebowitz, S. J. "File sharing: Creative destruction or just plain destruction." Journal of Law and Economics 49.1 (2006): 1-28. Web. 30 Nov. 2014.
Oberholzer-Gee, F., and K. Strumpf. "File sharing: Creative destruction or just plain destruction." Journal of Political Economy 115.1 (2007): 1-42. Web. 30 Nov. 2014.
Rainie, Harrison, Mary Madden, Dan Hess, and Graham Mudd. The Impact of Recording Industry Suits against Music File Swappers. Washington, D.C: Pew Internet & American Life Project, 2004. Internet resource.
Appendix 1: Table 1 showing Sample sales by category (Oberholzer-Gee and Strumpf 9)
Appendix 2
Source: (Liebowitz, 2008)
