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Official: P2P music not harming Canada

Should cheer up Leonard Cohen, eh

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Another study of P2P networks has found that music file-sharing has no detrimental effect on the CD racket and, if anything, is associated with higher physical sales.

This time the verdict comes from two University of London economists working for Canadian government business tentacle Industry Canada.

Birgitte Andersen and Marion Frenz crunched government-sponsored research data, and concluded: "Among Canadians who engage in P2P file-sharing, our results suggest that for every 12 P2P downloaded songs, music purchases increase by 0.44 CDs. That is, downloading the equivalent of approximately one CD increases purchasing by about half of a CD."

Across the whole Canuck population the picture is ambivalent. They write: "Analysis of the entire Canadian population does not uncover either a positive or negative relationship between the number of files downloaded from P2P networks and CDs purchased. That is, we find no direct evidence to suggest that the net effect of P2P file sharing on CD purchasing is either positive or negative for Canada as a whole."

The pair aren't the first to cast doubt on the record industry's public line that file-sharers are bankrupting it. There's been a tit-for-tat battle of report and counter report for several years over the role played by P2P in the well-documented financial woes of the record industry.

Just couple of weeks ago, a report by Capgemini, commissioned by the industry's own Value Recognition Strategy working group, estimated the British industry has lost £112m to pirates since 2004.

Andersen and Frenz do agree with Capgemini that the unbundling effect - where consumers download one or two favoured tracks rather than buying the whole album, is having an impact. They found that half of Canadian P2P music downloads are motivated by unwillingness to cough up for a complete CD album. But they found no measurable relationship between P2P use and use of iTunes.

Just to muddy the waters further, a 2005 survey by music research agency The Leading Question claimed that active file-sharers spend four and a half times more than other music consumers on legal downloads.

The Industry Canada report is here. ®

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