Internet downloading is quite a hot topic these days! On the heels of the Google-YouTube announcement and recent arrests of several illegal MP3 homeusers (not just distributors - for the first time) in Singapore, I stumbled across an HBS Working Knowledge Q&A article with this controversial premise: "Internet music piracy not only doesn't hurt legitimate CD sales, it may even boost sales of some types of music" with the right pricing and marketing strategies, given that most downloading is done 1) over P2P networks by those without access either due to location or money, thereby not directly causing "lost" sales, and 2) for sampling purposes, which if found favourable and sold "smart" ala iTunes, could even favourably impact sales.
If in fact the research is correct, the strategic implications for the music industry are profound. Instead of conducting a high-profile campaign against pirates, should the industry instead target "samplers" to encourage them to buy more music? Should the industry consider peer-to-peer services as marketing tools rather than the enemy? Should online pricing be different from in-store pricing? What happens when broadband makes it as easy to illegally download an entire CD as an individual track or two?
These questions are further discussed with one of the authors here.
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