Main points:

- the CD Sales decline is related to increase of consumer spending on DVDs, cinema tickets, concerts and digital downloads
(the author makes the realistic assumption, that three downloads equal one CD-Album less sold)

- more low-selling artists than ever before share the money earned from copyrights

http://www.lessig.org/blog/archives/danish_filesharing.pdf



As it has been publicized in the Danish media, the Danish recording industry has seen a massive
decline in sales since 2000. The underlying causes for this decline have been debated and depending
on the views of the debater, various factors ranging from economic crisis to piracy have been held
accountable. Now, for the first time ever in Denmark a number of these factors and the
consequences of the decline in sales have been systematically examined and the results are
surprising.

Let it be clear that the recording industry has indeed seen a massive decline in sales since 2000. In
the period 1995-2000, record sales increased from approx. 16 million physical units (primarily CDs
but also vinyl LPs and singles) to approx. 20 million units per year. Since 2000, physical unit sales
have dropped to 9.8 million in 2004, a decline of more than 50% compared with top levels in 2000
and 30% compared with 1995. The year 1995 has been chosen as the recording industry does not
disclose its figures for the previous years, and they have a good reason not to. It turns out that
record sales for the period 1980-1993 were consistent at 10 million units per year. In fact, the period
1995-2000 represents a truly unique situation in the modern history of Danish record sales and 10
million units sold in 2004 is more likely a return to regular conditions than a sign of crisis.

No matter what their motives might have been Danish consumers bought 20 million units in 2000
and it is fascinating to contemplate why sales have declined so heavily. I have examined a number
of factors mentioned in the public debate and I have had to reconsider my own views on the issue in
the process. For instance, it has not been possible to prove that the economic crisis or the increased
popularity of computer games played a role in the decline of sales.

It is however possible to identify and document a number of alternative explanations for the sales
decline other than piracy. In this regard, the increased DVD sales and cinema visits are important
factors. Both products saw highly increased sales after 2000.

The link between VHS/DVD sales and declining CD sales is truly remarkable, in fact, the increase
in VHS/DVD sales fully compensates for the decline in CD sales. Using the word