A new paper published by the American economist Joel Waldfogel shows that music piracy hasn’t hurt the creation of new music as the RIAA, IFPI and other industry representatives have often claimed. Instead, music has democratized in recent years with the balance of power shifting from the monopoly of the major music labels to smaller, independent ones. Music itself may be more alive than ever before.
In recent years many academics have researched the supposed link between Internet piracy and the revenues of the major music labels, with varying results. Some have concluded that there is no adverse impact of piracy on sales, others argue that there’s a moderate negative relation, but the overall consensus is that the losses as claimed by the industry itself are hugely exaggerated.
Another claim of the music industry, that piracy hinders the creation of new music, has now been debunked by Applied Economics Professor Joel Waldfogel of the University of Minnesota. In a recently published paper he shows that there is no evidence that piracy hurts creativity or slows down the supply of recorded music.
“The legal monopoly created by copyright is justified by its encouragement of the creation of new works, but there is little evidence on this relationship,” Waldfogel starts in his introduction of the paper catchily titled: “Bye, Bye, Miss American Pie?”.
“The supply of recorded music appears not to have fallen off much since Napster, and there is at least suggestive evidence that independent music labels, which operate with lower break even thresholds, are playing an increased role in bringing new works to market,” he later concludes.
Where some researchers focused heavily on finding out what the link between piracy and music industry revenues is, another major shift in the music industry in the past decade was left mostly ignored. Without going into detail on the data provided, we want to highlight some excellent points Waldfogel lays out in his paper.