File Sharing Drives Music Sales

Er yeah it does, some London scientificos working for Canadians say so:

‘The two researchers at the University of London that conducted the study for the Canadian Government estimated that the effect of one additional P2P download per month is actually an increase in music purchasing by 0.44 CDs per year.’ (via Mashable)

0.44 of a CD = Less than half a Radiohead album, all of the Westlife catalogue and a night in a Dublin Hotel, 3 of Girl’s Aloud (any 3) a Hummer limo and a lingerie photo shoot or Lily Allen and a packet of Marlboro Lights.

I recently got talking to one of the founders of a popular music site, who shall remain nameless. They have an all you can eat monthly subscription business model, part of which is a royalty divided amongst the music publishers they have deals with according to the volume of sales. It works, it’s successful and though occasionally unlicensed music will creep into the inventory, publishers are loathe to sue such a site for file sharing as it’s seen as counter productive, ie ‘we’re providing a solution to all your woes, sure it’s not fool proof, but it’s the best solution you’ll get for now’.

Another start-up looking to create a new business model is Slice The Pie which combines Artist discovery with a music stock market.

The internet is saturated with music and as the economics of music shifts away from corporate management, the pressing question is ‘how do we find any of the good stuff?’ Methods of discovery are fractured and you could make a career out of checking Last.fm, Pandora, Hype Machine, Slice The Pie etc… on a daily basis and whilst automated suggestions based on our current music tastes are technically impressive they don’t accurately reflect how we discover music in the real world and the complex series of causal links that lead us to discovering a new artist.

So it comes down to marketing, ‘give me what you think I want to listen to it, where I’m at’, often engrossed in a social network a la Facesoft, or if you want to tap into the main music vein, the P2P networks which account for a dizzying 1 in 10 of music downloads. Legitimize the file, seed it for free, DRM free, let people find it ,let them talk about it, let them share it, let the work filter into the social networks, build a fan base, build a business.

The Radiohead Effect of ‘pay what you like’ works because you’re Radiohead, you have an established 15 year fanbase. If you’re Wannabee-Mockney-Lass-Like-Lily-Allen you need to give it all away, you need to court the fans and for that you may need the financial support of a record label to make it.

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