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Industry Canada undertook a music file sharing study during 2006-07 to measure the extent to which music downloads over peer-to-peer file sharing networks, for which the sound recording industry receives no remuneration, affect music purchasing activity in Canada. The data used for this analysis are from a Decima Research survey conducted between April and June, 2006, on behalf of Industry Canada. The report, prepared by University of London researchers, Birgitte Andersen and Marion Frenz, found that music downloads have a positive effect on music purchases among Canadian downloaders but that there is no effect taken over the entire population aged 15 and over.

This is the graph the record industry doesn’t want you to see.

 

It shows the fate of the three main pillars of music industry revenue - recorded music, live music, and PRS revenues (royalties collected on behalf of artists when their music is played in public) over the last 5 years.

An even more striking thing, perhaps, emerges in this second graph, namely that revenues accrued by artists themselves have in fact risen over the past 5 years, despite the fall in record sales.

Reader Jay pointed out in the comments an article from The Root that goes through who gets paid what for music sales, and the basic answer is not the musician. That report suggests that for every $1,000 sold, the average musician gets $23.40.

Courtney Love famously laid out the details of recording economics, where the label can make $11 million... and the actual artists make absolutely nothing.

Given its stance against free music, Warner likely plans to charge Spotify so much for each free music download that the service is forced to cap monthly usage for free users, restrict invites, or otherwise avoid running itself into the ground by paying full price for what it gives away to listeners for free. (To deal with the same issue, Rhapsody caps free listening at 25 songs per month and MOG offers a free trial.)

So, let's look at Corey Smith. In the earlier part of this decade, Smith was a high school teacher, playing open mic nights on weekends. But then, he started focusing on building his music career. He started playing numerous live shows, and really worked hard to connect with fans. He gave away all of his music for free off of his website, and used that to drive more fans to his shows. On top of that, he offered special $5 pre-sale tickets to many shows, which has a useful side effect: his biggest fans would convince many others to go as well, building up his fan base, and getting more people to go to more shows. He tried pulling his free music off of his website as an experiment, and saw that his sales on iTunes actually dropped when he did that. In 2008, mostly thanks to live shows, Corey was able to gross nearly $4 million. While giving his music away for free. Connecting with fans and giving them a reason to buy worked wonders.

File-sharing, for years, has been one of the copyright industry’s favourite scape-goat. Lately, British news sources have received a fresh dose of “studies” where the copyright industry through government officials have been saying how file-sharing costs British artists billions thanks to the millions of file-sharers in the UK. While the numbers have since been cast into doubt, one journalist from the Guardian did some research of his own and discovered that while music sales have fallen over the years in Britain, they have likely fallen thanks to growing video game and DVD sales.

But, the fact is that ignores the real issue: which is that kids today (tomorrow's consumers) are file sharing at a very high rate. A new study, sponsored by UK Music (the UK organization that's looking to get ISPs to put in place some sort of blanket licensing plan) has found that over 60% of kids in the UK admit to file sharing, with 83% of those admitting to doing it regularly, and those surveyed claiming to have downloaded an average of 8,100 tracks.

While the defenders of the old system want to liken file sharing to a problem like shoplifting, at some point you have to realize it's something entirely different. This isn't a marginal behavior done by "bad kids." This is about as common as can be.