LSE says Big Music file-sharing claims are flawed

A report published by the London School of Economics says that music industry estimates of financial losses caused by illegal file sharing are deeply flawed.

The paper, Creative destruction and Copyright Protection - Regulatory Responses to File-Sharing, claims that the Digital Economy Act (DEA) gets the balance between copyright enforcement wrong and that peer to peer (P2P) file sharing should be used to promote innovation.

The LSE also suggests that providing music fans with a simple way to legally download at a reasonable price is a much better way to combat piracy than "a heavy-handed legislative and regulatory regime."

The music industry has claimed that it loses as much as $40 billion a year to 'illegal' file sharing but the LSE publication suggests that the decline in physical sales of recorded music can't be attributed to file sharing alone. Changing patterns in music consumption, the prevalence of legal digital downloads and the fact that people have far less money to spend must all be taken into consideration.

The Digital Economy Act, which was rushed, virtually unchallenged, through Parliament in the wash-up period between the previous Labour Government and the current Con-Dem coalition, has been challenged and delayed so many times that it has become by its very nature obsolete before it even makes it into law.

Moves to hobble, or even disable, the Internet connections of those suspected of persistent copyright infractions have been attacked by ISPs, human rights organisations and every right-minded individual not connected with the music industry as unfair and unworkable.

With Internet access seen by many as a basic human right, alongside food, water and shelter, plans to implement draconian 'three strikes and you're out' excommunications have been pilloried by politicians and pop stars in equal measure.

"According to the international industry lobby group," says the LSE report, "the music industry and its artists lost out on more than $40 billion in revenue in 2008 because of piracy including (illegal) file-sharing. Claims about piracy and revenue losses are often based on the wishful thinking of rights holders. They assume that most unauthorised copies would be replaced by the sale of a legitimate product if file-sharing was effectively controlled."

While it's true that illegal file sharing does take place on a huge scale, anecdotal evidence suggests that most serial downloaders would never have paid for the music they leach.

Evidence from the US cited in the report suggest that warnings and legal threats have little or no effect on illegal file sharing. The RIAA threatened to sue more than 30,000 individuals between 2003 and 2008, yet the level of file-sharing continues to rise without abate.

Forcing mainstream ISPs to block access to a list of 100 well-known file-sharing facilitators like The Pirate Bay will do nothing more than force the whole practice underground.

The simple fact of the matter is that the tectonic speed at which laws are devised and implemented will never be able to keep pace with technology and those who use it.

The music industry has made some tentative forays into new distribution models with the likes of Spotify signing deals with The Big Four music labels.

But the report says the music industry must become even more flexible to survive:

"There is ample evidence that music fans are ready to pay a contribution, providing it is a reasonable amount and the process is not too complicated or restrictive," the paper concludes. "Consideration should be given to a levy on blank media use and consumer recording equipment. A levy could be included in the cost of an Internet connection – a kind of licence to download’."