File sharing, for instance, had a net-positive impact on music spending--while experienced file sharers were 75 percent more likely than the average online music fan to report an increase in spending, they were only 27 percent more likely than the average online music fan to report a decrease. However, CD-writable drives and broadband were both net-zero technologies--they were equally likely to cause increases and decreases in music spending among online music fans with either/both of those technologies. All three technologies in conjunction represented a net- positive. While online music fans with all three technologies were 95 percent more likely than the average online music fan to report an increase in music spending, they were only 65 percent more likely than the average online music fan to report a decrease.

Jupiter's analysis here paints a much more complex and ambiguous picture of the effects of music file-sharing than does the report released by the IFPI, acknowledging that file-sharing can have both positive and negative effects on consumer music spending. Taken as a whole, this study provides the most detailed evidence yet that music file-sharing leads to net increases rather than decreases in consumer spending on music, and Jupiter's analysts dismiss the 5% drop in global music sales in 2001 reported by the IFPI as being caused by other underlying factors such as the normal cyclicity of the music market, an overall drop in consumer spending related to the general economic slowdown in 2001, increasing competition from other entertainment product categories such as games and DVDs, the increasing reliance of the music industry on a small number of titles for the majority of sales, and the end of the initial CD growth period in which many consumers repurchased music on CD which they already owned in other formats.

CONCLUSIONS

While more research should be done in this area, it seems clear that the impact of music file-sharing is not so unambiguously negative as the recording industry would have us believe, and may even increase sales of recorded music overall. With these data in mind, it seems almost willfully perverse for the RIAA, the IFPI and other bodies representing the industry to spend so much time and energy targeting file-sharing companies and their users when they might be considering new ways to profit from the rapidly-changing business environment instead. In the long run, it seems doubtful that the industry will be able to control or even significantly slow down Internet file-sharing without imposing draconian controls on the flow of information of all sorts, the type of control envisioned by Microsoft in their recent Palladium proposal.

I believe that now is the time to ask ourselves: is this the kind of future we want? Or is there still any life left in the 1990s conception of the Internet as a freely accessible forum for the exchange of human creativity and ideas? As many commentators have observed, the burst of creativity which accompanied the exponential growth of the Internet in the 1990s has seemingly lost momentum in the past few years, a phenomenon which some (most notably Stanford law professor Lawrence Lessig) have blamed on the increasing colonization and control of the Net by governmental and corporate interests. The choice is ours to make, but if we (music listeners and creators alike) fail to act now, the industry may well succeed in their attempts to maintain and tighten their control over the global distribution of music.