The supposed link between unrestricted file-sharing and declining CD sales

Some excerpts/cut-outs from my thesis. This one is an overview of that worn old question: Is there a link between falling CD sales and file-sharing, and in that case – what does it look like?

Regarding the link between file-sharing and falling CD sales, there are various studies having different conclusions. A general conclusion is that CD sales started dropping simultaneously as unregulated file-sharing began to rise (initially with Napster in 2000).

However, a direct causal link is hard to establish, since there are so many other factors that could serve as an explanation to this drop: Changing consumption patterns (with the ascendance of video games, DVD:s, hardware etc. as new expenditures); shrinking profitability from CDs; a decline in the number of new titles; a cyclical slump after the boom of the 1990s; decreased diversity of radio playlists; and so on.

The absolute majority of all Internet traffic is p2p file-sharing

…and most of the files shared are video files. The biggest p2p protocol, by sheer volume of data exchanged, is BitTorrent.

According to a special report by Internet analyst ipoque (2007), peer-to-peer (p2p) keeps producing more Internet traffic than all other applications combined. Its average proportion of the overall data traffic regionally varies between 49% in the Middle East and 83% in Eastern Europe. The world average share of Internet traffic that consists of p2p-based file-sharing exchange is estimated to around 70%.

In both Germany and the Middle East, web-browsing makes use of the second-biggest share of overall traffic, with a share of 26% in the Middle East and 10% in Germany. These numbers do not include any audio or video streaming content embedded in web pages, like YouTube. This media-streaming content was counted separately. Tellingly, in Germany, media-streaming ranked third with a proportion of about 8%. In the Middle East it was negligible with less than 0.1% of the share. Possible reasons, ipoque argues, include lower-speed Internet access and less media-rich content on local-language Web sites.