As to the IIPA statistics–anyone credible in this field knows the loss statistics are greatly exaggerated. But those stats are really the only ones out there (it’s not easy data to collect and few have the incentive or resources to do it besides the industries themselves). So, if you are going to quote stats, that’s about all you’ve got. But all of that obscures a larger point which you have begun to touch on–while the music and film industries are crying about alleged losses to filesharing, consumers have begun spending their money elsewhere. Is that because they get their music and movies for free and have more to spend on online gaming? Maybe, maybe not–it’s virtually impossible to say, and for every study arguing one way there seems to be a countervailing study arguing the other way. But the internet is causing vast changes in consumption habits and that’s what we’re interested in in this project–how the internet is changing these habits, how the music and film industries are trying to adapt, and how governments are using law to respond for better or worse. We’re not doing a statistical analysis; we’re basically trying to identify the paradigm shifts and make some predictions/recommendations based on our observations.

Just as a data point, just two SK online game companies- Gravity and Webzen’s- revenue growth in just 2003-2004 was $36 million dollars, making up in one year 1/4 of the ‘damage’ inflicted on the music industry. It seems likely that a large portion of the damage done by broadband to music is (1) made up for by growth in other sectors and (2) quite possibly caused by consumers shifting their purchasing to other, more interactive media. I would hope that any research that comes out of this project would take this kind of thing into account.

I would expect a rigorous academic project would seek better sources of data than the lobbying arms of the affected industries That said, I’m sure there is some impact, particularly on the music industry, as you point out. Surely this must also be balanced against industries which did not previously exist, like the thriving online gaming industry, and increased sales of hardware (PCs, mp3 players, etc.) It would be very interesting to compare the loss in sales in the music industry from 2001-2003 against the growth in sales in the Korean online gaming industry, mp3 player industry (several Korean companies are considered the biggest competitors to Apple), and Korean PC industry.

While I agree that online filesharing could in fact help certain songs gain the popularity it might not otherwise get and that many people are too quick to point out the internet as the cause of piracy of digital media, there is significant evidence of illegal file sharing via the internet which is hurting certain industries.

“The recorded music industry market of South Korea has been decimated by digital piracy, with sales dropping from $288 million to $162 million between 2001 and 2003. The entertainment software market has also been hit hard by piracy. Pirate games are accessed online via broadband connections and illegally downloaded. Overall, the Entertainment Software Association (ESA) estimates the value of pirated software to be at $349 million, based on a piracy rate of 43%. The motion picture industry has also been affected by proliferation of online piracy, especially through file sharing. In 2004, the Motion Picture Association of America (MPAA) identified over 7700 Korean online sites engaged in audio-visual piracy” (International Intellectual Property Alliance. 2005 Special 301 Report: South Korea).

An absolutely fair point–there’s little if any reliable evidence that filesharing online leads to significant losses (either financial or cultural) with regard to the cultural industries. That said, if you look at a positing I made last week on this blog, you’ll see that the Korean govm’t sees the problem as significant enough that it will subsidize the music industry with US$90 million. But many are way too quick to point to the internet as the cause of the music industry’s woes (as opposed to bad music being peddled by these industries or other compelling entertainment choices competing for peoples’ disposable incomes). And few entertainment companies want to admit that online filesharing could in fact be helping their sales.

Should they? Is there any proof that it is substantially damaging the intellectual property-based industries of the nation?