Economist Stan Liebowitz has been in the news lately for his study, analysis and interpretation of data regarding whether or not MP3s are harming record sales. See this post for background. Now Liebowitz is making his new study available on a preliminary basis with this introduction:

...I should point out a bit of hypocrisy among some followers of this issue. When I changed my mind, from thinking that the economic logic of MP3 downloading would have to harm the industry to thinking that the data indicated that perhaps it didn't, many who wanted this result to be true hailed me as someone willing to let the evidence talk.

These same individuals, now that new data indicates, to me at least, that perhaps MP3s are causing harm, want to argue that changing my mind because of the data is a sign of inconsistency. In fact, it is the same action, just with a result that was apparently not so popular.

I also would like to point out that my original article (arguing that harm was likely) was written in the fall of 2001 even if it wasn't published until May. I had argued there that although harm was likely, we probably hadn't seen much yet because CD writers were not available to a very large segment of the population. During the late spring and early summer of 2002 I began to change my mind based on the fact that I saw statistics indicating that CD writers were more common than I had thought. That was when the first Salon interview occurred. I also assumed that the current recession had reduced record sales. In the last two months I have put together a data set to try to answer these
questions more formally.

I discovered that there is no important linkage between disposable income and record sales. That made the 2001 decline in sales harder to explain without appealing to MP3 downloads. Then I saw preliminary 2002 mid-year SoundScan figures on total record sales (not the RIAA numbers that just came out). I projected the likely decline in CD sales from the SoundScan figures and the results indicated that the decline in sales was now deeper than any decline in the last 30 years and MP3 downloading became a more compelling hypothesis. I haven't rewritten the report to take account of the official RIAA numbers, but the CD decline in the RIAA numbers (7.2%) is very similar to the 8.1% CD decline I expected based on the earlier SoundScan numbers, so there will be little change except in a few words.

It is a work in progress and I appreciate any suggestions from those familiar with the industry.

Summary The sales of recorded music have fallen recently. Many articles have been written and statements made about whether this decline is due to the downloading of MP3 files. The claim ahs been made that MP3 downloading, if unchecked, would destroy the recording industry, a claim I term the "annihilation hypothesis". Unfortunately, much of the analysis appears to be little more than looking at the most rudimentary of numbers and then using one's favorite hypothesis to explain them. There are partisans on both sides trying to spin the numbers to fit their message. Most of the claims that I have seen are often unsubstantiated and sometimes are based on the use of different definitions.
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