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The amount of music that is being downloaded is slowly dropping because of the lawsuits that the industries have filed against hundreds of people relating to copyright infringement.
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Record labels have been blaming the fall of their profits on illegal distribution of music. Nearly 75 percent of college students have downloaded music from the Internet, 58 percent of them using Napster, according to a study by Greenfield Online, a Connecticut research firm, and YouthStream Media Networks. 6 billion in lost wages and more than $1. It is impossible to accurately estimate how many files are downloaded using peer-to-peer systems, but claiming that each download represents a loss is irrational. Many people download out of curiosity, to check out an artist, which often leads to a sale.
The other side of the story is that sharing music online does not kill CD sales. Although the record labels can legally demand around $150,000 per song, people well known with the cases have said most settlements have been for $2,500 to $7,500.
In conclusion, the topic of whether downloading hurts the industry or not is a very touchy and indefinite one. 'Our issues are financial, not operational,' E. Researchers at Harvard University and the University of North Carolina tracked music downloads over 17 weeks in 2002, matching data on file transfers with actual market performance of the songs and albums that were downloaded.
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Since illegally downloading files has become more common, there has been much controversy about whether infringement of copyrighted music has either hurt or helped CD sales.
Some economic studies have found that file sharing has a negative impact on record sales. For example, three papers published in the April 2006 issue of the Journal of Law and Economics (Liebowitz, Rob and Waldfogel, Zentner) all found harm from filesharing. Alejandro Zentner notes in another paper published in 2005 (Topics in Economic Analysis & Policy), that music sales have globally dropped from approximately $38 billion in 1999 to $32 billion in 2003, and that this downward trend coincides with the advent of Napster in June of 1999. Finally, using aggregate data Stan J. Liebowitz argues in a series of papers (2005, 2006) that file sharing had a significant negative impact on record sales.
However, the most widely cited paper concludes that file sharing has no negative effect on CD sales. This paper by Olberholzer-Gee and Strumpf, was published in the February 2007 issue of the Journal of Political Economy, and is the only paper which analyzes actual downloads on file sharing networks. As staff writer John Borland of CNET News.com reports, “even high levels of file-swapping seemed to translate into an effect on album sales that was ‘statistically indistinguishable from zero,’ they [the researchers] wrote.” From data gathered from the many weeks of tracking downloading on OpenNap servers they found that most users logged on very rarely and when they did log on they only downloaded a little more than one CD’s worth of songs. To show how these downloads affected album sales they tracked sales and downloads of 500 random albums of varying genres and after doing so found that illegal downloads would only be a small force in the decrease in album sales, possibly even slightly improving album sales of the top albums in stores at the time.
Some researchers believe that massive copying has been occurring ever since the invention of tape cassettes and the increased economic impact of simpler access to copying provided by computer networks does not seem to have been large..
According to an article published by the Almighty Institute of Music Retail, an estimation of 900 independent record stores have closed since 2003, leaving 2,700 nationwide. Carolyn Draving, the owner of Trac Records is being closed after 32 years and she believes the downfall is a direct result of the illegal internet. She states that she lost many long-time consumers to the internet and knows for certain that a few stopped coming in because they just downloaded instead. Another owner, Warren Greene of Spinsters Records claims that nobody buys CD’s anymore and that most of his customers have turned to the internet in order to obtain their music.
In order to keep these smaller record stores alive, owners are having to find alternative means to stay afloat. Greene has saved his store from going under “...by finding a new product to sell: T-shirts emblazoned with digital images.”He purchased a digital garment printing machine that lets him print any digital photo a customer wants onto a T-shirt. The shirts sell for $20 to $25, and are creating a higher profit margin than the sale of CD’s.
An article posted in the Wall Street Journal have found that CD sales have dropped 20% since last year, which they say is the latest sign of the shift in the way people acquire their music. While the music industry, along with other types of media such as film and TV are having a difficult time adapting to the digital age, BigChampagne LCC has reported that around one billion songs a month are being traded on illegal file-sharing networks. As a result of this decline in CD sales, a significant amount of record stores are going out of business and “...making it harder for consumers to find and purchase older titles in stores.”