Tuesday 31 January 2012

HADOPI boosts legitimate sales

On 23 January 2012, the International Federation of the Phonographic Industry published its Digital Music Report 2012. Alongside news about the state of the online music business, the report referred to new research on the effect of the French HADOPI laws. In "The Effect of Graduated Response Anti-Piracy Laws on Music Sales: Evidence from an Event Study in France", US academics Brett Danaher and others examine iTunes sales data in France in the context of the enactment of the HADOPI laws. In a rather persuasive analysis, they find that HADOPI resulted in an increase in iTunes sales of some 22.5% for individual songs and 25% for albums. 

This research is unusual in that, on the basis of a powerful dataset, the academics were able to estimate the effect of enforcement measures on revenues. Almost all the prior research focused on the less immediate question whether illegal file sharing damaged legitimate sales.  Apart from oft-quoted (but discredited) papers by Oberholzer-Gee and Strumpf (2005 version), that research generally found a substantial effect on legal sales. However, unless enforcement makes a difference to sales, the question of damage is merely of academic interest to business people. The Danaher paper points out that its conclusions probably represent a minimum effect on the legitimate market, as there are legal music services other than iTunes which could be expected also to have benefited from HADOPI.

It will be interesting to see whether this transparent research will have any impact on the debate about online piracy, which has a theological, rather than a scientific, character. 

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