In the following report I look at 30 years of record sales to try to determine what have been the most important influences on record sales. I then use this information to examine what has happened in the market recently to try to determine whether there is evidence that MP3s have caused harm and how large that harm might be. My conclusions, which tend to change as new data come in, are currently as follows:

1) Record sales have had four prior declines in the last thirty years, and the decline as of 2001 does not appear different in character than the other declines.
2) Preliminary reports on mid-year record sales for 2002 indicate a more pronounced decline in sales that now appears to make the current dip larger than previous dips. This new data adds support to the claim that MP3 downloads are causing harm to the recording industry.
3) Income does not appear to be an important factor in record sales changes during the last 30 years. Therefore the current recession does not appear to be responsible for the current decline, contrary to my previous expectations.
4) Sales of singles have been falling almost continuously for the last thirty years. The continuing impact of their decline, therefore, should probably be removed from overall record sales, which diminishes somewhat the severity of the current downturn.
5) Inflation adjusted list prices fell during the 1970s but have remained almost constant for the last twenty years. Increased sales by discounters has probably slightly lowered the price paid by consumers. Price does not seem to play a role in record sales fluctuations.
6) Unit sales per capita have risen substantially over the last 30 years. The main reason for this appears to be that listening to recorded music can be done in more locations. Additional uses for recorded music became available in the automobile and, particularly in the 1980s, in activities amenable to portable 'walkman' type devices.
7) The factors that led to growth in unit sales appear to have ended in the mid 1990s. Cassette sales have been dropping to zero and some of the recent decline in overall sales is due to this decline in cassettes.
8) My current, very rough, estimate is that if MP3 downloads continue unabated, that unit sales will drop somewhat more next year and then begin to level off, with an overall decline of about 20% that would be caused by MP3 downloads.

Kevin Marks responds:

You do not seem to have analysed DVD sales at all. You say:
if the official numbers are to be believed, listening to recorded music took up approximately 45 minutes of a person's time per day, whereas going to movies took up 2 minutes, watching prerecorded movies took up 9 minutes, and playing videogames took up 7 minutes. I do not believe it is reasonable to argue, at these low time-levels of usage, that changes in movie attendance, DVD usage, or videogames usage, for the population as a whole, could be responsible for more than a small portion of the changes in album sales discussed below.
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