Music Pirating. The reason Justin Timberlake doesn't make music anymore. Well maybe not, but why isn't he? I need to dance

Felix Oberholzer-Gee of Harvard Business School and Koleman Strumpf of UNC Chapel Hill (now at the University of Kansas) once claimed in a 2004 paper that file-sharing did not have a measurable effect on recorded music sales. Since then though, they have reversed their claims in their 2010 paper, stating now for a fact that, yes, illegal downloading may undercut sales.  From their most recent paper (page 16), “The majority of studies find that file sharing reduces sales, with estimated displacement rates ranging 3.5% for movies (Rob and Waldfogel, 2007) to rates as high as 30% for music (Zentner, 2006).” With the emergence of Peer to Peer (P2P) sharing, music is more accessible than ever to be downloaded for free (read: illegally).

Oberholzer-Gee and Strumpf used SoundScan figures to explain the increase in new music works. In 2000, 35,516 albums were released. Seven years later, 79,695 albums (including 25,159 digital albums) were published (Nielsen SoundScan, 2008).

Since 2000, the number of recordings produced has more than doubled, they later concluded. This makes it difficult to argue that weaker copyright protection has had a negative impact on artists incentives to be creative.

It would be interesting to hear their thoughts on the drop in new musical creative works. After steadily rising for years, the number of new releases in 2009 dropped to 98,000 from 105,000 in 2008. While works have been released, actual new creative works have declined. Originality from artists have been diminishing year to year.  For example, this figure includes re-releases, new compilations of existing songs, and new digital-only versions of catalog albums. Does that mean artists had less incentive to create in 2009? Or they may want to look at the other side of music copyright and consider what file-sharing has done to songwriters and the number of new compositions being written each year.

The researchers admitted that artists today have an incentive to spend more time touring as a result of lower recorded music revenues. More time spent touring means more time between albums because there is less incentive to create new works rather than perform. However, for new artists who want to break into the market, lower barriers to entry should provide ample reason to create in the hopes of someday having the luxury of deciding between touring or more frequent recordings.

More compelling, when data from the U.S. Bureau of Labor Statistics on the number of people employed under the category of “musical groups and artists” is compared with music sales, a strong correlation is evident. (see chart below).  Selling music is an important motivator to creating music, and that the decline in sales has correlated with fewer people making a living in music.

Source: US Department of Labor, Bureau of Labor Statistics

These unfortunate statistics demonstrate that illegal downloading undermines the entire chain of creating and investing in music. So more and more artists slowly grow into new careers because of the lack of availability and prospective riches that come from becoming a musician.

So please support your favorite artists, both local and worldwide, by buying their music. Otherwise they may only tour and never release new music!

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