An economist who had previously argued that there was no evidence of filesharing hurting the CD business now says there is evidence:
The bottom line: MP3 downloading is harming sales. No other explanations that have been put forward to explain the recent decline hold up under analysis.
Liebowitz has seesawed back and forth, but as far as I know he is the sole source of non-crap economics related to filesharing. Anything that brings down the hysteria is a good thing, so I'm happy to see even news that could hurt us in the short run.
Liebowitz' paper is worth the read if you have time. It's long but not dense, and it's full of interesting nuggets of information. Also, something you get from reading the whole thing that you won't from reading the headline is how hard it is to figure out whether MP3s hurt RIAA members.
. Two key quotes from the paper:
If the analysis in this paper is correct, MP3 downloads are causing significant harm to the record industry. It is not clear, however, whe ther such downloading in our current legal environment will cause a mortal blow to the industry. I suspect that the worst damage to the industry is behind us, but we will know soon enough as new data are made available.
and
The goal of this paper was to provide some empirical analysis to replace what has often been little more than emotional wrangling and haranguing on both sides. Answers to difficult policy questions are not likely to be well informed without such an understanding of the empirical backdrop to the issues.
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