Report: File Sharing Boosts Music Sales

Further fueling the bitter conflict between record labels and such file-swapping operations as Napster, Jupiter Communications, Inc. has released a report showing that people who use the file-sharing networks spend more money on music.

Users of Napster are 45 percent more likely to have increased their music spending than non-users, Jupiter found in a survey of more than 2,200 music fans. In the study, Jupiter recommends that the music industry begin searching for ways to capitalize on the popularity of file sharing rather than relying on lawsuits to slow or stop Napster and its counterparts.

“Napster usage is one of the strongest determinants of increased music buying,” said Jupiter analyst Aram Sinnreich. “Because Napster users are music enthusiasts, it’s logical to believe that they are more likely to purchase now and increase their music spending in the future.”

Only one group in the survey — 18 to 24 year-olds who spend less than $20 (US$) on music every three months — said they were not likely to increase their music buying despite online music use.

Opposing Views

Jupiter’s findings clash with a report released in May by Soundscan that showed a sharp drop in CD sales near college campuses, where Napster use has traditionally been heaviest.

That report has been embraced by the Recording Industry Association of America (RIAA) and was submitted as evidence in its ongoing copyright infringement lawsuit against Napster.

However, Jupiter’s Sinnreich said the SoundScan study shows that music sales dropped off before Napster launched and does not take into account the shift from brick-and-mortar music stores to online CD sales that “would have occurred independent of Napster’s existence.”

Sinnreich told the E-Commerce Times, “Records labels must stop litigating and start partnering, lest they kill the goose that laid the golden egg.”

More Lawsuits

The report comes as Napster’s technological cousin, Scour.com, was slapped with a lawsuit. Joining the RIAA in the battle against file-swapping, the Motion Picture Association of America (MPAA) and other groups moved to shut the network down with a lawsuit filed Thursday in Manhattan. The lawsuit seeks damages of up to $150,000 for each movie or song downloaded over the Scour network.

In announcing the suit, MPAA president Jack Valenti called Scour.net and similar file-swapping networks “a simple case of theft.” Scour.com is backed by Hollywood mogul Michael Ovitz.

Music Industry Change Needed

Jupiter said that online distribution offers a chance for record labels to directly market to individual music fans while receiving immediate feedback from consumers based on what music they choose to download.

“If the music industry were to let players like Napster stand, it would drive incremental sales,” Sinnreich wrote in the report. “But, if the industry partnered with networked music-sharing technology companies, the benefit would be exponentially greater.”