New York, NY (Top40 Charts/ IFPI) IFPI has today rebutted a new "misleading" study into the effects of music piracy.
Digital Music Consumption on the Internet: Evidence from Clickstream Data, published by the European Commission Joint Research Centre, claims that music piracy does not displace digital music purchases and is unlikely to harm the industry's digital revenues.
Frances Moore, chief executive of IFPI, said: "The study contains significant flaws and is therefore misleading in its conclusions about the impact of piracy. In particular, it uses a methodology that does not accurately measure digital music purchases and, very importantly, it omits from its assessment the impact of piracy on subscription and streaming services. Most research confirms a very different picture, which is that piracy overall has a negative impact on the legitimate music business."
Spotify, the subscription service with over 5 million paying users internationally, also highlighted the study's weaknesses.
Will Page, director of economics, Spotify, said: "Digital
Music Consumption on the Internet: Evidence from Clickstream Data' is a flawed study. The narrow definition of the market chosen by the authors is both puzzling and deeply misleading. In particular, the omission of streaming services from the study fails to appreciate the diverse make-up of the digital marketplace. As a result, the unfair competition that legal streaming services face from music piracy is not properly acknowledged by the authors - and moreover, the report fails to observe how consumers can migrate from illegal services into legal venues like Spotify."
IFPI points to three specific flaws in its analysis of the JRC study:
- There is a major problem in how the data is employed to study sales displacement. Nielsen Netview data provides the number of 'clicks' or 'visits' to legal and illegal services which the JRC classified as containing music, across the five major EU markets. There is a fundamental gap in the data though - no music transaction is being measured or analysed, all conclusions are based on approximations and estimates of music activity. This severely impacts the results and is not a good proxy for legitimate music consumption.
- The study is confused over the overlap between the use of legal and illegal services. It is not news that some pirates are also legal buyers - this is consistently found in other studies. Recent data from Kantar Worldpanel in the UK based on diarised music purchases (actual spend, music-based measure - a more appropriate data source for this type of analysis) highlighted that while some file-sharers spend a lot on music (physical/digital), this is counterbalanced by many file-sharers that don't buy any music - as many as 44.8% of file-sharers in the UK buy no music at all. These and separate third party research results contradict the JRC's finding that illegal downloading stimulates digital sales - if a large proportion of illegal downloaders do not buy any music (and yet consume, in some cases, large amounts of it), it cannot be logical that illegal behaviour stimulates legal download sales and inflicts no harm.
- The JRC paper's suggestion that copyright infringement online is unlikely to inflict harm on digital revenues is undermined by its use of a very narrow view of digital revenues, namely only digital downloads. This is a crucial omission, as downloads are only one source of revenues in today's digital music market. Subscription services and ad-supported streams already account for more than 30% of digital revenues in
Europe (IFPI). Making an authoritative assessment of the impact of online piracy on legal digital consumption cannot be done if it does not go beyond the impacts on legal downloading. It is a more complex task, and one the JRC did not undertake, and this significantly weakens the study.
For the full text of IFPI's analysis, click here: https://bit.ly/Y0KJiN
