Is file-sharing killing the music industry?

John Kennedy, chairman of the International Federation of the Phonographic Industry, said in the organisation’s 2009 Digital Music Report that “the vast growth of unlawful file-sharing quite simply threatens to put the whole music sector out of business”.

It’s a startling message, but is it true? There are certainly plenty of people who agree. Indie band Future Of The Left’s frontman Andy Falkous was so incensed by file-sharing that he wrote an impassioned blog post explaining how it was threatening his livelihood – a piece that was subsequently republished by UK Music in national newspapers.

There’s no shortage of evidence to back up his concerns. “Industry reports suggest that at least seven million British citizens have downloaded unauthorised content, many on a regular basis, and many also without ethical consideration,” reads the Copycats? Digital Consumers in the Online Age report.

“Estimates as to the overall lost revenues if we include all creative industries whose products can be copied digitally, or counterfeited, reach £10 billion conservatively, as our figure is from 2004, and a loss of 4,000 jobs.”

Staggering as these figures are, they’re not necessarily conclusive. As first revealed by the Radio 4 show More or Less, the seven million file-sharers estimate was originally gleaned from a research paper written by Jupiter Research and commissioned by the BPI. As it turns out, the figure of 7m was rounded up from 6.7m – itself taken from a survey of only 1,176 households, 11.6% of which admitted to having used file-sharing software.

This 11.6% was then discretionally adjusted upwards to 16.3% “to reflect the assumption that fewer people admit to file-sharing than actually do it”. Jupiter then extrapolated the 6.7m figure by calculating that there were 40m people online in the UK in 2008, as opposed to the Office of National Statistics finding that there were only 33.9m people online during that year.

If Jupiter had used the Government’s figures, the total number of file-sharers would be 5.6m. If the researchers hadn’t adjusted their figures upwards, the total number of file-sharers would be only 3.9m – or just over half the figure quoted in the report.

The BPI argues that the research remains valid. “From our perspective, there are many pieces of separate substantial research that all consistently show that around seven to eight million people in the UK are file-sharing music alone,” said a spokesperson for the BPI.