File Sharing and Cannibalization

Fred Benenson comments the Nine Inch Nails Ghosts I-IV album over at the Creative Commons blog. The album is a great example that tears apart the arguments put forward by many “content” industry know-it-alls.

The argument, often repeated, is that putting material online will destroy all sales and therefore profits. There are several examples of books making great sales even after the content has been made available for free online. But thick academic books have been seen as a strange exception to the rule. In a recent discussion with a Swedish publisher they included the condition that making material available online only could work in English books – the Swedish market was too small to cope.

But books are not the only successful free content. The Nine Inch Nails Ghosts I-IV album is available online via file sharing networks – the entire content was licensed via Creative Commons license (BY-NC-SA) which allowed users to download it legally and many, many did so. But the fascinating thing is that Ghosts I-IV is ranked the best selling MP3 album of 2008 on Amazon’s MP3 store.

NIN Best Selling MP3 AlbumNIN’s Creative Commons licensed Ghosts I-IV has been making lots of headlines these days.

First, there’s the critical acclaim and two Grammy nominations, which testify to the work’s strength as a musical piece. But what has got us really excited is how well the album has done with music fans. Aside from generating over $1.6 million in revenue for NIN in its first week, and hitting #1 on Billboard’s Electronic charts, Last.fm has the album ranked as the 4th-most-listened to album of the year, with over 5,222,525 scrobbles.

The natural question is why fans bother buying files that were identical to the ones on the file sharing networks? According to Fred explanations vary from the convenience and ease of use of NIN and Amazon’s MP3 stores to the desire of fans to support the music and career of musicians they like.

The point is that “the next time someone tries to convince you that releasing music under CC will cannibalize digital sales, remember that Ghosts I-IV broke that rule, and point them here.”