Could piracy actually help album sales? A new study by a researcher at North Carolina State University suggests that frequently, pirated albums sell slightly more copies than ones that aren't.
"Leaked" albums that show up for download on popular BitTorrent sites before the release date have long been considered the bane of the Recording Industry Association of America. A 2007 report by the Institute for Policy Innovation suggested that piracy costs the U.S. economy $12.5 billion annually.
But according to Robert Hammond's analysis, albums that are shared before they are officially released actually sell more copies than expected, possibly because downloaders are able to "filter" whether an album is any good before buying it legitimately. Hammond found that well-established artists stand to benefit the most from pre-release sharing.
"If it's an artist you've never heard of or have [never] listened to, you're coming to it with a clean slate, so there's a good chance you're not going to like it," he says. "If you already know the artist, you're just downloading to make sure it's not a clunker—if you like it, you'll still go out and buy it."
Hammond analyzed more than 1,000 albums leaked on a popular, well-curated "private" BitTorrent tracker between May 2010 and January 2011. Albums that appeared on this tracker, which Hammond kept anonymous, were likely to appear on the site several days before spreading to other, more public file-sharing avenues.
He essentially found a zero effect for album leaks—albums that leaked 30 days in advance of its release date were expected to sell about 60 additional copies. Leaks for major-label artists seemed to benefit more than lesser-known artists.
"File sharing benefits mainstream albums such as pop music but not albums in niche genres," he wrote. "File sharers of artists with established fan bases are positively predisposed toward the album."
Conventional wisdom would suggest that making an album available before it's released would hurt album sales, but record labels are increasingly playing along by offering album streams on certain websites days or weeks before it goes on sale. Hammond says the smarter labels are wising up and using the streams as a "promising promotional avenue."
"My results suggest that streams will not cannibalize sales," he says.
Hammond's findings, he says, are good news for individual artists but not necessarily good for the industry. He likens it to advertising in other sectors—if Coke starts an advertising campaign that increases its sales, for instance, it doesn't mean people are buying more cola products overall.
"They could be stealing sales from Pepsi," he says. "I think that's probably a big part of what's going on. If you look at whether downloading of an album helps sales, the answer is yes, but its effect on the overall industry is likely negative."
Because albums can be shared through a variety of avenues—online file lockers, E-mail, public BitTorrent servers, and more—it's difficult for Hammond or other researchers to get an industrywide look at the effects of piracy.
"That's the biggest question: How generalizable are these results? It's a very select sample. I found these file sharers are more likely to purchase albums, but what happens when you look at the average file sharer?" Hammond says. Getting a more comprehensive look at the effects of piracy is something that has eluded researchers and the industry for years.
Corrected 5/30/12: An earlier version of this article misidentified the effects of piracy on the U.S. economy.