Duck Soup for the Soul: The Return of the Industry Canada Music Study

MTP readers will remember the absurd “studies” commissioned by Industry Canada in 2007 that purported to show that piracy is good for us.  The world has changed considerably since 2007, and fashion accessories are beginning to change, too, like trading in luxury cars for an ankle bracelet or paying $500,000,000 fines for illegal drug ads.  I don’t think that serious people believe this bunk anymore, or as the noted economist Chico Marx asked in that great econometric study, Duck Soup, “Do you believe me or your own eyes.”

A new report by the Australian Centre for Law and Economics, “The Impact of Free Music Downloads on the Purchase of Music CDs in Canada”, comes down hard on the believe your own eyes side of the aisle.  The Australian study reviews both the 2007 study as well as a second crack at it in 2010 by the Industry Canada study’s authors.  The Australians’ conclusion is, not surprisingly, quite different than both studies by the Industry Canada authors:

All of our regression results…show a negative association between P2P downloading and CD demand. We consistently find a negative and statistically significant partial correlation between CD purchases and P2P downloads. The range of these estimated correlations…implies a 10% increase in P2P downloads reduces CD demand by around 0.4%.

This directly contradicts the much cited and controversial conclusion of [the Industry Canada study, ] the only other paper to study this Industry Canada data. [The authors, Andersen and Frenz (“AF”)] claimed that the data showed “… no association between the number of P2P files downloaded and CD album sales,” claiming therefore that “… this paper show (sic) that P2P file-sharing is not to blame for the decline in CD markets.  Music markets are not simply undermined by free music downloading and P2P file-sharing.”

[W]e focused on the changes in CD demand and changes in P2P downloading, using data in the survey that
AF ignored on 2004 and 2005 behaviours of participants. By focusing on a longitudinal analysis of how the change in individual P2P downloading behaviour affected the change in CD demand we were better able to isolate the true relationship between increases or changes in P2P downloading and changes in CD demand.

So you have to ask yourself why is it that Industry Canada continues to post the 2007 “study” on their website although it completely fails the Duck Soup test—meaning it purports to “prove” what is an obviously absurd conclusion based on simple observation.  I don’t know if this is a case of agency capture, bias or simply symptoms of the hangover from the bad old days when the miasma fermented by many strange and odious things wafted from the bureaucrats below decks.

As we discovered from the embarrassing U.S. Government Accountability Office “stealing is good” study, having these discounted studies lingering around as if they have any explanatory powers is, in my view, an unseemly role for a government agency.  We understand that Industry Canada has essentially refused to remove the study from its website despite being presented with yet another study demonstrating its failings.

It seems that Industry Canada offered no explanation and gave no justification for continuing to knowingly offer under the imprimatur of the Canadian government the “scientific proof” that piracy is good for us.  Industry Canada seems inclined to try to foist off any problems with the study onto the authors due to some disclaimer—so if the study is wrong, it’s the authors fault, not the government agency that commissioned it (and by the looks of it tried to heavily influence for unknown reasons) and is continuing to post it (even after the same authors Industry Canada tries to distance itself from published a later version of conclusions based on the same data).

What will Industry Canada think of next?  Black is white or the Sun rises in the West perhaps.

Where is Bishop Ussher when you need him.