P2P and Music Sales: Who Knows?

I don’t really pay too much attention to the various studies finding that the p2p nets either help or hurt CD sales. While it would be very interesting to know if there’s a correlation, and whether it’s positive or negative, you can spin either result any way you like. For example, if p2p boosts CD sales, why then it proves that the record companies are a bunch of whiners who should sit back and collect their windfall like Hollywood did with the VCR. But if p2p hurts CD sales, it proves that the record companies are a bunch of whiners clinging to an obsolete business model who should just shut up and die. If you dislike p2p, reverse the arguments as appropriate.

All the same, two things did occur to me recently on this subject. First, to the extent that new business models depend on slashing production costs and giving every band the equivalent of a production studio on a home computer, there is one way in which slashing those costs hurts musicians. I’m thinking of session musicians, who make their money playing as hired guns in recording sessions. Their income shows up on the pie chart of an album as an above-the-line production expense. Not every dollar of production expense is a waste, in terms of compensating artists, is all I’m saying. (Indeed, album producers are artists, too, and extremely talented ones: think of the contributions Dr. Dre and George Martin.)

Second, to the extent that I think the current situation is not stable, my music purchasing is way down. In particular, my probability estimate of a possible impending price collapse for CDs in the medium future is high enough that I’m deferring buying music. The $9.99 online album is gaining traction; I think it’s not an unrealistic prospect that that price point may fail to hold, too.

Many things could happen. If the record companies disapper and artists start selling music directly and cheaply, then I’d feel like a sucker if I paid $9.99 for an album from which a lucky artist sees $1 when I could have waited and paid $3 for an album from which the artist sees $2. If the entire fight against the p2p nets fails so completely that the current copyright regime fails with it, and everything ever made is out there for unrestricted use under some kind of compulsory license, I’d feel damn stupid for having paid sticker price for an album whose marginal cost to me has become $0 (but for which I have to shell out in the form of a bandwidth and storage tax).

Much the same goes for the day when all-you-can-eat subscription services reach the level of interface sophistication and comprehensive catalog I demand—why pay now for something whose marginal cost is headed to $0? Even if the world settles on a “perfect” DRM standard, I doubt that the cost-per-listen involved is really going to be higher than the cost of buying music in fee simple is right now. All in all, I think the sensible thing to do when it comes to music is to delay. And that’s not good news for the music companies, not at all.