There are many serious and/or academic studies that show that online music piracy is not hurting legal music sales. Such as this one from earlier in 2013:

From TorrentFreak: “New research published by the European Commission’s Joint Research Centre shows that online piracy doesn’t hurt digital music revenues. The researchers examined browsing habits from 16,000 Europeans and found that there’s a positive link between online piracy and visits to legal music stores, irrespective of people’s interest in music. The study concludes that the music industry should not see piracy as a growing concern.”

This study focuses on digital music piracy vs. legal digital sales, and not the reduction of CD sales.

Here’s the conclusion from the study paper itself (highlighted text is mine):

In the last decade, the music industry has faced many changes. In particular, it has seen its revenues decrease drastically, with industry representatives blaming most of it on piracy (IFPI, 2011). Nevertheless, the music industry seems to have embraced digitization and its many business opportunities. Indeed, digital music revenues have increased more than 1000% during the period 2004-2010, and growing 8% globally in 2011 to an estimated US$5.2 billion (IFPI, 2011, 2012). While most empirical studies have indeed confirmed a significant negative impact of piracy on sales of physical music, the growing importance of the digital sector in total music industry revenue calls for a better understanding of the impact of both piracy and other music consumption channels on legal digital sales. In this paper, we revisit the question of music sales displacement in the digital era, and analyze in detail the effect of online music streaming on the legal purchases of digital music. Conducting research on the revenue e?ects of illegal music consumption requires detailed data on the quantities of both legal and illegal music consumed by individuals. Relying on an original dataset, we are able to follow the clickstreams of more than 16,000 Internet users, and in particular their visits to legal and illegal music consumption websites. After using several approaches to deal with the endogeneity of downloading and streaming, our results show no evidence of sales displacement. Overall, our different estimates show relatively stable, positive and low elasticities of legal purchases with respect to both illegal downloading and legal streaming. Across specifications, the estimates suggest elasticities of about 0.02 between clicks on illegal downloading websites and legal purchases websites. If this estimate is given a causal interpretation, it means that clicks on legal purchase websites would have been 2% lower in the absence of illegal downloading websites. Specific country estimate show that for Spain and Italy the elasticity is zero, while it is close to 0.04 for France and the UK. All of these results suggest that the vast majority of the music that is consumed illegally by the individuals in our sample would not have been legally purchased if illegal downloading websites were not available to them. Our results are in line with the findings of recent papers analyzing music piracy (Bastard et al., 2012; Hammond, 2012). Essentially these papers show that illegal music downloads have little or no effect on legal digital sales. These findings complement and do not contradict earlier research that found substantial amounts of sales displacement of legal physical music sales by illegal digital downloads.

Another contribution of our paper is the analysis of the effect of online music streaming on the legal purchases of digital music, a question that has received very little attention in the empirical literature thus far. On this particular question, our elasticity estimates show somewhat larger figures, ranging from 0.024 in our Tobit specification to 0.07 in the OLS case. Controlling for individual fixed effects leads to a 0.05 elasticity, suggesting complementarity between streaming services and purchases of legal digital music. Again, country differences show that this effect is larger for France and the UK (around 0.06) while it is smaller for Spain and Italy (around 0.035). Our results are in line with the results in (DangNguyen et al., 2012), the only study that has, to our knowledge, analyzed the question so far. Taken at face value, our findings indicate that digital music piracy does not displace legal music purchases in digital format. This means that although there is trespassing of private property rights (copyrights), there is unlikely to be much harm done on digital music revenues. This result, however, must be interpreted in the context of a still evolving music industry. It is in particular important to note that music consumption in physical format has until recently accounted for the lion’s share of total music revenues. If piracy leads to substantial sales displacement of music in physical format, then its effect on the overall music industry revenues may well still be negative. We cannot draw policy implications at the industry-wide level, as our analysis is only confined to the digital segment of the music industry. Nonetheless, digital music revenues to record companies are growing substantially, reflecting the increasing importance of digitization in the music industry (IFPI, 2012). From that perspective, our findings suggest that digital music piracy should not be viewed as a growing concern for copyright holders in the digital era. In addition, our results indicate that new music consumption channels such as online streaming positively affect copyrights owners.

How many studies are needed for the music industry to understand that they are chasing ghosts?

John

The music industry is slowly trying to find new ways to make money when CD sales are being reduced every year. The newest trend is streaming, such as Spotify. The problem is that this is not really a “new model” – it is still about charging individual users a sum of money and then try to distribute that money back to record companies and composers.

Here’s the truth about music streaming and what artists and composers earn from it:

According to a number of music executives, Spotify generally pays 0.5 to 0.7 cent a stream for the paid tier, which results in $5,000 to $7,000 per million plays.

Read the whole article here. It shows that even a million plays won’t keep an artist/composer with rent, food and working tools for a month.

Even for an under-the-radar artist like Ms. Keating, who describes her style as “avant cello,” the numbers painted a stark picture of what it is like to be a working musician these days. After her songs had been played more than 1.5 million times on Pandora over six months, she earned $1,652.74. On Spotify, 131,000 plays last year netted just $547.71, or an average of 0.42 cent a play.

The ones that really do make money off of music these days, are ISP who sell broadband services. Why are they not taken on by the music industry?

John