P2P 'no threat' to music sales

Sharman Networks, the company behind the Kazaa peer-to-peer (P2P) file sharing software, has welcomed research claiming that the sharing of digital music files has no effect on CD sales.

According to the Recording Industry Association of America, CD shipments in the US fell from 940 million to 800 million between 2000 and 2002, with file sharing getting the blame.

And last week, the British Phonographic Industry published research reporting that retail spending on music is down 32 per cent on albums and 59 per cent on singles among UK downloaders from P2P sites.

But research by Professor Felix Oberholzer-Gee, of Harvard Business School, and Professor Koleman Strumpf, of the University of North Carolina, disputes the claims.

"We find that file sharing has no statistically significant effect on purchases of the average album in our sample. Based on our results, we do not believe file sharing will have a significant effect on the supply of recorded music," the academics concluded.

Sharman Networks insisted that the loss of revenue from music sales as a result of P2P use is one of the first arguments "wheeled out" by the entertainment industries.

The company said that the new study's primary finding supports its position that instead of hindering the sales of entertainment media, P2P could be leveraged to increase the amount of revenue generated by more traditional media.

"Consider the possibilities if the record industry actually co-operated with companies like us instead of fighting," said Nikki Hemming, chief executive at Sharman Networks, in a statement.

"We have offered content providers the opportunity to work with P2P customers for nearly two years, yet the record industry continues its narrow-minded strategy of litigation and legislation."

A PDF of Professor Felix Oberholzer-Gee's draft paper on file sharing can be downloaded here