US economist refutes Industry P2P study

A US economist specializing in copyright issues is taking aim at a new Canadian government study claiming that peer-to-peer filesharing is actually good for the music business. Stan Leibowitz, the Ashbel Smith Professor of Economics at the University of Texas, has written a detailed critique of the Industry Canada-commissioned study. He concludes that since the study's main - and most controversial - findings are based on survey answers from downloaders, the risk of bias is high. "Downloaders know what they should say if they want to make it seem that downloading does not harm sales-they would say that they purchase many more albums than they do while also reporting on their downloading activities. To the extent that survey takers lie in this manner, the results will be biased in favor of a positive impact of file-sharing," he writes on his website.The most significant finding from the report, which was undertaken by Birgitte Andersen and Marion Frenz at the University of London, and based on data from a Decima Research survey, was that among Canadians who engage in P2P filesharing, for every 12 P2P downloaded songs, music purchases increase by 0.44 CDs. But Leibowitz claims the authors' conclusion "is not only implausible but is actually impossible to be true, given their data." He contends these conclusions simply don't reflect that reality that music sales are plummeting."An increase of 14 CDs by the 29% of the population that are downloaders (according to the survey) should have increased sales by about 4 CDs per person, yet during the period of peer-to-peer growth sales of albums have dropped from about 3 per person to 2 per person," he writes. "The reason it is so hard to square the reported results with actual numbers is that the reported result is simply incorrect and the numbers in the survey are also incorrect."Record producers also question study's resultsThe head of the Canadian Independent Record Production Association (CIRPA) agrees with Leibowitz's conclusion that there are problems with how the data were analyzed for the Industry Canada report. While Duncan McKie also acknowledges that downloaders have traditionally been big purchasers of music, he says the problem is that this increased purchase rate still doesn't bring purchases of physical media inline with what it was before online music was available. "The question is, if they bought an average of 10 CDs in the year 2001, are they now buying an average of five or seven?" he asks. "There's still correlations between downloading and purchase because they tend to be the highest purchasers, but purchasing has declined with the advancement of free downloads, as a group and individually," adds McKie, who has about 30 years of experience in the market research industry, including stints as an executive with research organizations Pollara Inc. and BBM.McKie also questions why Industry Canada chose to have the study results analyzed by academics outside of Canada, and why its findings were not subject to peer-review.Groups demand action on IP rightsCIRPA is not alone in questioning the Industry Canada report, or advocating for copyright reform in Canada. On Monday, McKie and executives from the Canadian Musical Reproduction Rights Agency, the Business Software Alliance, the Canadian Motion Picture Distributors Association, the Canadian Recording Industry Association, the Canadian Publishers' Council, the Society of Composers, Authors and Music Publishers of Canada, the Canadian Film and Television Production Association, the Entertainment Software Association of Canada, the Canadian Music Publishers Association, the Alliance of Canadian Cinema, Television and Radio Artists, and the Association of Canadian Publishers jointly signed an op-ed piece in the Hill Times calling for government action on all intellectual property rights. The article claims both the P2P study's "findings have been authoritatively cast into doubt," and that an additional study from Statistics Canada reporting healthy profits in Canada's music industry "comes as a surprise to an industry that has seen its sales cut in half since the advent of widespread unauthorized filesharing." McKie adds that the StatsCan study couldn't have taken into account the independent music sector because the government research agency doesn't have access to the numbers. Those who opposed stricter copyright legislation and anti-circumvention laws have conversely lauded the Industry and StatsCan reports as additional proof that record labels and other rights holders are crying afoul over nothing. To further illustrate the polarity of the debate, the same Hill Times issue also featured an op-ed from Ottawa intellectual property lawyer Howard Knopf, who wrote that, "Nothing is more interventionist and counterproductive to innovation and cultural evolution than excessively strong IP protection." With rumours abounding that the Conservative Government is, indeed, going to issue a "made-to-order American style copyright bill," Knopf offers 13 ways Canadian copyright law is already stronger than that south of the border. There's certainly no lack for debate on the issue, but in the face of such polar opinions, it certainly begs the question of how the government discerns the facts, particularly when its own analysis is be being called into question. "I think knows the truth," says McKie. "They have a lot of good advice from within government, however, some people chose to make certain things public for whatever reason, where within government there's other people who think the other way."

US economist refutes Industry P2P study

Broadcast | November 28, 2007

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