Wednesday, April 27, 2005


The debate on the impact of P2P music downloads on record sales has raged for nearly 5 years. Strangely enough, there is no conclusive evidence that supports the view that Web downloads have depressed CD sales (not that this has stopped the recording industry from suing thousands of downloaders).

Such inconclusiveness shouldn’t be a surprise. Sure, we may listen to music everyday, read about our favorite bands, know which acts are hot at the moment and go to a concert every now and then. But most people (including yours truly) don’t have a clue about which revenue stream is more important for artists, how recording contracts are structured or why “ilegal” practices such as payola and scalping still flourish, among others.

As it turns out that the popular music industry is very complex and its inner workings are poorly understood. This is the conclusion one takes away after reading “Rockonomics: The Economics of Popular Music”, a new paper by Alan Krueger and Marie Connelly of Princeton Universidty.

It’s not exactly easy reading, but it serves as a good primer on the music industry, which is certainly more interesting and fun than, say, ball bearings.