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Could this be right?

This comes from today’s (Cinco De Mayo) CMU Daily:

There’s been loads of research over the years that shows that those pesky file-sharing kids are also some of the entertainment industry’s best customers. But hey, there’s always room in your CMU Daily for another report saying much the same stuff as all the other ones.

That file-sharing music fans might invest their pocket money into gig tickets, t-shirts and other more tangible band-related gubbins is unsurprising, though the latest bit of research on this issue suggests file-sharers are also pretty big customers of the sorts of content-based products they are actually nicking off the net, which presumably backs up the much touted theory that many use file-sharing for the purposes of previewing before purchase. That said, the new research from the University of Amsterdam says that file-sharers subsequently spending money on content-based products is more common in the film and gaming space than with music.

But even in music, where easy access to free tracks via online sharing networks probably is in part responsible for declining record sales, money consumers save by nicking digital versions of albums is often then spent on other music products, or so reckons Professor Nico van Eijk. Although based primarily on a study of Dutch file-sharers, his report also looked at the Swedish industry, where record sales have, until recently, been steadily declining amid rampant online piracy. But, van Eijk says: “Total revenues [in Sweden] from recorded music, live concerts and collecting societies remained roughly stable between 2000 and 2008″.

Of course, a boom in live and merchandise revenues is no good for record companies, whose interests are solely in recorded music, but, as we have rambled on many occasions before, that’s mainly the fault of labels for not diversifying their interests ten years ago when it first became clear that record sales were going to go into terminal decline.

Looking back at the record industry’s initial mad panic when the internet arrived on the scene, van Eijk is predictably critical, writing: “Labels tried to stem the tide of unlicensed music file-sharing with their conservative strategy of abstaining from innovation, promoting legal measures against supposed offences, and digital rights management. This strategy resulted in the current backlash, providing space for a new entrant establishing a major brand in the online music business: Apple’s iTunes. Reinvention of the business model looks like the only way out for the traditional players in the music industry”.

Of course, such reinvention has been underway for a few years now, even if it’s taking quite a bit longer than everyone would like. It’s certainly too soon to say which sorts of new business models are going to work, and van Eijk doesn’t give any real opinions on that issue, except that current digital price points are almost certainly too high.

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