Canadian agency: P2Pers plunking down money for MORE CDs

Comments:

• Rob Preece says:

  November 4, 2007 at 1:10 pm

  Back when I was studying statistics, one of the first rules we learned was ‘correlation does not imply causation.’ Here’s a personal tidbit–I’m not much into music. Why does this matter? I neither download from peer-to-peer networks, nor do I buy CDs. In contrast, someone who loves music is likely to do both. This creates a correlation but it does NOT mean that more p2p would lead to greater CD sales.

  I’ve commented before that the historical correlation between eBook giveaways and pBook sales may, in fact, be causative, but that improved reader hardware is likely to eliminate or even reverse this correlation.

  Rob Preece
  Publisher, http://www.BooksForABuck.com
• David Rothman says:

  November 4, 2007 at 2:16 pm

  Additional point well taken, Rob, thanks. With or without P2P, some folks may already be inclined to be heavy buyers of CDs. David
• Garson O'Toole says:

  November 4, 2007 at 3:42 pm

  Rob Preece makes a good point about the difficulty of interpreting statistics. I suspect that the Canadian study cited above leads many readers to an unjustified and probably inaccurate conclusion. To see the problem in interpretation consider the fact that the amount of piracy has been following a steep growth curve. For example, an article from 2005 is titled “P2P activity doubles in two years”. Further, there is no evidence that this growth has stopped.

  A simplistic construal of the Canadian study would imply that the increase in piracy should be associated with an increase in CD sales. But what has actually happened to CD sales in Canada? Here is an excerpt from the article “Canada’s CD sales tumble in first quarter” from April 27, 2007:
  

  In what appears to be a continuation of a long-running trend, sales of music CDs, DVDs and other formats fell 35 per cent in the first quarter of 2007 compared with the same period a year earlier, the Canadian Recording Industry Association reported Thursday.

  That comes after a 12 per cent sales drop between 2005 and 2006 — the largest-ever annual decline in Canada’s music market — and an almost unbroken string of sales declines since 1999. “We’ve experienced sizable short-term drops before, but nothing compares to the drastic numbers we’re seeing so far this year,” said CRIA President Graham Henderson.

  This means that the overly simplistic prediction from the Canadian study is completely wrong. Indeed record company representatives cite the drop in sales as evidence for the very different theory that piracy causes CD sales to drop. How can these statistics be reconciled? Rob Preece insightfully says:
  

  I neither download from peer-to-peer networks, nor do I buy CDs. In contrast, someone who loves music is likely to do both. This creates a correlation but it does NOT mean that more p2p would lead to greater CD sales.

  One possible way to reconcile the divergent trends is to hypothesize that people who use P2P networks to obtain music are interested in music and naturally buy more music. However, if these same people did not have access to P2P networks then they would buy even more music than they do now. In other words the P2P user of today fits the profile of the heavy music buyer from earlier generations. He or she buys more music than a non-P2P user, but he or she does not buy as much music an aficionado of the “old days” without P2P networks. Of course, this is just a guess. It is just one way to try to resolve the seeming paradox.

  Some readers of the original article above may internalize the crude formulation that “more P2P trading means more sales” or “P2Pers buy more stuff”. However, if sales continue to drop then these formulations will appear misleading.