File sharing's impact on CD sales = none?

That's what Professor Felix Oberholzer-Gee of the Harvard Business School and Professor Koleman S. Strumpf of the University of North Carolina at Chapel Hill say in a new report according to this article in the New York Times.

Using complex mathematical equations and analysis of downloading patterns and CD sales, the two professors found that the effect of downloading music using peer-to-peer file sharing applications was negligible.

According to the article, the professors state, "While downloads occur on a vast scale, most users are likely individuals who would not have bought the album even in the absence of file sharing."

Meanwhile, the RIAA continues to point the finger directly at file sharers for the decline in record sales, from $60 million in 2000 all the way down to $32 million in 2003.

The RIAA doesn't take into account a sluggish economy, fewer new releases and the consolidation of radio stations whose rigidly programmed playlists offer less variety to listeners and limit them in their ability to seek out new music via the radio.  

The list price on most new CDs is $18.98.

If that price seems high, it's because it is.

In fact, this year record companies and retailers paid out a whopping $67 million to music consumers as settlement in class action lawsuits that claimed that:

Major labels and retailers conspired to artificially keep CD prices high from 1995 through 2000.

I'm not making this up. It is fact.

The record companies and retailers also paid out $75 million in non-cash consideration (e.g., not-for-profit, charitable, governmental or public entities to be used for music-related purposes).

Ironically, people who signed up as a claimant in the lawsuits received a cash disbursement of $13.86, which doesn't even cover the cost of buying a single CD at list price.

As part of the settlement, the record companies and retailers do not admit any wrong doing. Nice.

Here are the record labels involved and what they paid as part of the settlement:

1. EMD (EMI, Virgin, Priority): $6,500,000 in cash and $8,500,000 in non-cash consideration
2. WEA (Warner Bros., Rhino, Atlantic): $13,650,000 in cash and $15,750,000 in non-cash consideration
3. Universal: $18,850,000 in cash and $21,750,000 in non-cash consideration
4. Sony: $12,523,500 in cash and $14,701,500 in non-cash consideration
5. BMG: $12,776,500 in cash and $14,998,500 in non-cash consideration

Here are the retailers involved and what they paid:
6. Trans World (FYE, Coconuts, Strawberries): $800,000
7. Musicland (Sam Goody): $2,000,000
8. Tower: $275,000 in twelve consecutive monthly installments (that's $2.3 million)

If you download music and feel bad for doing so, don't.

Whenever possible, shop at and support independently owned record stores and buy music on independent labels.