Labels lie to hide incompetency, new study suggests as it states “downloads’ effects on sales are statically indistinguishable from zero”

File sharing

…Or is it? LSE suggest otherwise

A study of the music industry by leading financial body the London School of Economics concludes that filesharing has not contributed to the collapse of the music business in any way – and suggests industry chiefs are lying when they say it has.

Bosses of the music and movie industries have focused on blaming pirate activity for all negative financial results, and have ignored the fact there’s a decline in leisure spending across the world, says the LSE. They conclude that pirates are not to blame for a drop in sales. Instead, people are simply spending less on leisure pursuits because they’re faced with higher bills, lower pay rises and less job security.

And the report points out that people who don’t own computers – and therefore can’t share files – have stopped buying music at exactly the same rate as those who do.

Citing an earlier report the LSE quotes: “Downloads have an effect on sales that is statistically indistinguishable from zero.”

While bosses avoid tackling the real causes of the industry’s decline, it will continue, they say: “Household budgets for entertainment are relatively inelastic. Downward pressure on leisure expenditure will increase due to rising costs of living and unemployment, and drastic rises in the costs of public services.”

The LSE report suggests the introduction of strong laws against online piracy will not prevent the music business from collapsing – and that bungling bosses are only wasting time and dwindling resources by claiming otherwise.

Mathew Lasar of Ars Technica says: “The content industry has won a key aspect of the war: the argument that filesharing has hobbled the music and movie businesses, hurts artists and costs jobs.

“The LSE’s paper argues that everything the content industry says about filesharing is wrong. It suggests filesharing is the future, and that revenue downturns can be explained by other forces.”

A different study does indicate that filesharing could be responsible for 20% of lost income – but also finds the other 80% is a result of the music industry’s own sales techniques in offering music in a massive range of formats from digital singles to video game add-ons.

Legal filesharing is on the increase across the world – the LSE says income from digital streams has increased by over 1000% between 2004 and 2010 to $4.6bn.

In January industry pressure group the BPI let slip that their position on filesharing is based on the assumption that, without pirates, sales would never drop.

Commenting on UK figures which showed physical album sales were down by 12% in 2010 while digital album sales were up by 30%, BPI boss Geoff Taylor said: “Legal downloads should be able to offset the decline in CD sales.”

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