Jupiter researcher catches a fast one from BPI

Filed in archive Privacy & Security on April 17, 2006

BPI, the British record industry trade association, claimed that file sharing has cost the UK music industry 1.1 billion pounds (almost $2 billion US) over the last 3 years. Jupiter Research analyst Mark Mulligan calls the BPI on the figure, noting lower accumulated revenues of .29 billion pounds in the period, leaving a missing .81 billion pounds.

He adds:

The BPI should
a) know better than to infer that consumer survey data is actual national market revenue data (however much it might help their PR push)
b) accept the fact that there are many bigger reasons impact declining music sales (prices too high, physical piracy (a MUCH bigger factor according to sister organization IFPI), competing expenditure (DVDs, games consoles etc.)

File sharing is a crucial factor for the future (in the way it is changing behaviour patterns amongst youth) but is currently just one element of a wider mix. File sharers represent just 10% of UK Internet users and just 5% of the total UK population. If, (and this is a highly hypothetical IF) these 3.3 million file sharers are really responsible for 1.1 billion in lost spending, that means that they had to not spend 110 pounds each per year, which puts them above average spending for UK music buyers. If that really is how much they would have otherwise spent, then the music industry has got a bigger problem than it could have imagined - that would mean that all the music aficionados have switched over to file sharing. But of course they haven't, because that spending simply wasn't there before file sharing.

To finish off, I am not under estimating the importance of tackling file sharing. It needs to be hit head on, and legal action against individuals is a necessary part of the strategy. But it certainly isn't responsible for what is actually the 60% of the current size of the UK Music industry.