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A group of researchers at the London School of Economics published an interesting report last month (h/t Timothy B. Lee) examining the impact of illegal file sharing on various parts of the creative industries and the effectiveness of various policy responses. One key finding: while file sharing has some correlation with a decline in sales of recorded music overall music industry revenue, including publishing revenue, live concert sales and other sources, has not declined nearly as dramatically and actually ticked up slightly in 2011.
Looking at the chart above, some might conclude that individual file-sharing — what the record companies calls piracy — hasn’t had nearly as devastating impact on the business as official industry sources claim. But that doesn’t mean its impact hasn’t been disruptive.
Another way to look at that chart is as a map to a dramatic shift in revenue flows within the industry. Different rights owners and middlemen –including artists — have claims on different music revenue streams and can’t simply substitute one for another. Increased revenue from live concerts and digital services may cancel out much of the decline in recorded music sales in the aggregate, but different stakeholders end up getting paid when that happens.