Research: downloading generates more revenue for entertainment industry

A joint study by IViR, TNO and SEO suggests that downloading music is not detrimental to the entertainment industries’ revenues. Rather, the opposite is the case: downloaders are the entertainment industries’ best customers.

The study shows that in the end, music downloaders even pay more for music than non-downloaders do, for example by attending expensive concerts. The study also concludes that a ban on downloading music will not lead to increased sales. In fact, downloading by itself generates more buyers, because relatively unknown or little known artists reach a larger audience.

Nevertheless, it is not clear whether a downloader of music is not per definition a music fan who will therefore automatically spend more money on music than a non-music fan/downloader.

Downloading has had an equalising effect on the income of different types of artists. Especially lesser known artists gain more revenue by the online sharing of their music. Their concerts get better attended and the proceeds of t-shirts and concert tickets rise. Famous artists on the other hand experience a decline in income as a result of their music being downloaded.

A small remark should be made: the researchers are quick to equate the music industry with other sections of the entertainment industry. Besides the music industry, the entertainment industry also consists of the both the movie and gaming industry. These branches each offer a different kind of product with their own marketing possibilities. Musicians can earn some extra income by selling merchandise and giving concerts. For film producers and game studios, who invest millions in a single product, these opportunities are a lot different.

Professor Nico van Eijk (IViR) concludes that the entertainment industries’ reaction to the downloading phenomenon is old-fashioned and counterproductive. Instead of looking upon downloading as a new way to gain customers and market artists, they fight against it. By doing so, they in fact pursue their best customers. According to Van Eijk a ban on downloading will lead to even more underground techniques for the exchange of music, which makes surveillance even more difficult.

6 May 2010