How long have we all known this, and yet it's still news?And she has a point -- we do all know that. Yet the music industry (and by this I mean the major labels and the RIAA) continues to whine and complain to Congress (and sue their customers) over how file sharing is killing their business model, and yet they are turning record profits year after year. And more to the point, the people that download music (even illegally) are the same people that really like music. And most of them seem to buy a lot of music.
Now correllations do not equal causality, but one could make the case that the filesharing is in fact leading directly to increased sales. And the reason is obvious -- filesharing increases exposure for artists, exposure generates interest, interest generates sales. Sure, everyone could listen exlcusively to music they downloaded (illegally), but that's not always the best or most viable option. A legal CD sounds better, contains better meta information (such as the packaging), is more accurate (no missing tracks), and, thanks to "long tail" superstores like Amazon.com, is often easier to find.
I've personally purchased (legally) 18 CDs from Amazon so far in 2005, 8 from the iTunes music store, and 4 or 5 from Amoeba Music across the street. Hmm -- 30 albums for a guy that certainly knows how to download them for free. And not surprisingly, I've also downloaded a half dozen tracks, 6 or 7 remixes/mashups via Bittorrent, and even a full album or two from sites such as the grey-market All Of MP3. But most of the time I first heard the artist either own their own website (via the selection of free MP3s that smart bands offer), or bootlegs on audio blogs. I.e., those "free," and sometimes illegal, songs sold a hell of a lot of albums.
I buy music because I value sound quality and want to listen to the complete package, as the artist intended. (That said, I basically throw away the CD cases and rip everything to digital media.) What I am really looking for, and am willing to pay up to $50/mo for is: high quality (i.e., none of this 128 bitrate crap), diverse selection (extending deep along the long tail), DRM-free (if I can't play it on a Mac or Linux, it is useless to me), downloading or streaming service. Give me that and you have a replacement for my current combination of legal and illegal music consumption.
To the RIAA -- your time is running out. No one is buying the sob stories, even if they are buying your music. And by the way, I still stand by my claim that the iTunes music store is bad for consumers. But apparently it's pretty good for the record industry.