Take No Prisoners

How the RIAA Hoodwinks the Courts, Legislature and Public

(or, “Why the RIAA is full of BS”)

The Record Industry Association of America (RIAA) wants you to believe that unauthorized music downloads are responsible for the music industry’s recent decrease in sales and profits. It has two primary arguments (and since they made The War on Bullshit Blog, you can probably guess what I think of them…)

Individual Downloads

Its first argument runs as follows:

  1. “The U.S. music industry loses more than $300 million per year to street piracy alone” (http://www.riaa.com/faq.php)
  2. Peer-to-peer (P2P) downloading is way bigger than street piracy (http://www.riaa.com/faq.php)
  3. Therefore, the U.S. music industry loses way more than $300 million per year to peer-to-peer downloading.

Whether this makes sense depends on how you calculate a loss. If, every time someone downloads a song, you write that up as a $1 loss, then the RIAA has a point… wait… something smells like bullshit!

A peer-to-peer download only represents a loss to the music industry if, were that download unavailable, the downloader would have made a music purchase. Furthermore, even if the downloader were to buy the song on iTunes for, say, $1, that doesn’t imply $1 profit for the music industry. Profit = Revenue – Expenses. A peer-to-peer download does not create any expenses for the music industry. Recording, manufacturing and marketing a CD does.

The RIAA is trying to hoodwink the public and lawmakers into thinking that it’s being victimized by downloading – that downloaders are stealing millions upon millions of dollars from the music industry each year. But it’s all bullshit. They can’t establish that P2P file sharing is causing their decrease in profits. This causal relationship constitutes a theory, one that can be studied scientifically. And guess what?

There is no scientifically defensible evidence that an individual P2P download affects the profits of the music industry.

At this point, individual downloaders are off the hook as far as tort law is concerned. If the RIAA cannot establish that the individual accused had the accused effect, and they can’t, there is no basis for a lawsuit. End of story. (I sure hope a few judges read this…)

File Sharing as a Social Phenomenon

However, it could be argued that while an individual downloader is not responsible for the music industry’s losses, the social phenomenon of P2P file sharing is. This could still form a basis to outlaw this fine pastime.

The argument the RIAA can draw on goes as follows:

  1. Before P2P file sharing caught on, CD sales (or profits, or revenues, or whatever) were rising
  2. After P2P file sharing caught on, CD sales (or profits, or revenues, or whatever) have been falling.
  3. Therefore, P2P file sharing caused the fall of CD sales.

This isn’t really bullshit, it’s just false. More specifically, this is a classical logical fallacy called post hoc ergo propter hoc, a Latin phrase meaning, “after this, therefore because of this.” This is akin to saying, ‘I drank green tea before that big earthquake, therefore, drinking green tea causes earthquakes.’

There is no scientifically defensible evidence that P2P downloading as a social phenomena affects the profits of the music industry.

In fact, there is significant evidence to the contrary.

Economic study on the effect of music downloads

According to this new study: “the estimated effect of file sharing on sales is not statistically distinguishable from zero,” (p. 3). This is a formal way of saying that the authors found no causal link between P2P file sharing and industry losses.

To make this claim, the authors construct a variety of mathematical models to estimate the effect of downloading on music sales. They conclude: “Using detailed records of transfers of digital music files, we find that file sharing has had no statistically significant effect on purchases of the average album in our sample,” (p. 38) If you read the full paper, you will find that the authors cannot wholly reject a relationship between downloading and sales. This is a limitation of statistical reasoning – statistically, you can fail to find evidence of a relationship, but it’s much harder (potentially impossible) to show definitively that two variables are completely unrelated. Thus, conservatively speaking, this study indicates that, if there is an effect at all, it must be very small.

Thus, in the absence of scientifically defensible evidence to the contrary, the RIAA’s claim that music downloading is diminishing the music industry’s profits are bullshit.

On to Part 2 –>

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