Whatever happened to payola? An empirical analysis of online music sharing

The popularity of online music-sharing networks has attracted interest from the music industry, artists, consumer advocacy groups, the popular press, and government legislative and regulatory entities. P2P networks have become lightning rods for debates on intellectual property rights and music market fates. Yet, to date, little has been based on actual observed activity on online sharing networks. Here we report on an initial P2P network data gathering and analysis endeavor and relate it to market performance of music albums. The relative market performance of music albums is gauged using the list of top 100 albums on the weekly Billboard charts. The P2P sharing data gathered is longitudinal, spanning a period of 8 weeks. We also identify and track data for 47 upcoming album releases providing pre- and post-release comparisons of sharing activity. We offer four main findings: (1) significant piracy opportunity and activity were observed; (2) the level of sharing opportunities are related to albums' relative chart positions; (3) there is evidence of both “pre-purchase sampling” piracy and “lost-sales” piracy; and, (4) sharing activity levels provide leading indicators of direction of movement of albums on the Billboard charts. Points (3) and (4) have particular implications for music marketing and promotion.