I Download Illegally -- and Harmlessly

Good news for music downloaders: A recent study shows that Internet music piracy not only does NOT hurt legitimate CD sales, it may even boost sales of some types of music. That's good news for file swappers of all stripes.

In a paper published in March, Harvard Business School professor Felix Oberholzer-Gee and his co-author Koleman Strumpf, from the University of North Carolina at Chapel Hill, said most downloading was done over peer-to-peer networks by teens and college kids, groups that are "money-poor but time-rich," meaning they wouldn't have bought the songs they downloaded. In that sense, the music industry can't claim those downloads as lost record sales.

In fact, illegal downloading may help the industry slightly with another major segment, which Oberholzer and Strumpf call "samplers" -- an older crowd who downloads a song or two and then, if they like what they hear, go out and buy the music.

Interestingly, the first half of this year saw the release of numbers seemingly supporting this theory: The number of illegal music downloads continued to increase -- but so did music sales.

Here are some of the highlights of the study:

• About 45 percent of music files downloaded in the United States come from computers in the U.S. More than 100 countries supply files to the U.S. file-sharing community, and many of these countries do not have strong records of protecting copyrighted materials.
• People do not download entire CDs. They download a few songs, typically the hits that one would also hear on a Top 40 station. This suggests that peer-to-peer is much like the radio, a great tool to promote new music.
• Only one of three downloads is completed successfully. File sharing is fairly cumbersome for many consumers with poor Internet connections. Consumers are expected to download entire CDs when broadband connections become more common. This is a less rosy scenario for the music industry because downloads of CDs are likely to be closer substitutes for CD purchases.