Research objectives
Our objectives for the project are as follows:
Establish the attractiveness of file sharing over purchasing music through conventional means using the following criteria:
- Cost
- Convenience
- Music selection
- Quality of download
Undertake a descriptive research design to define the chief users of file sharing through the following attributes:
- Frequency of use
- Genres of music typically downloaded
- Demographics of users
- Access capabilities
Assess whether the following can be used by record labels to profit from the use of file sharing by college age students:
- Official record label websites featuring high quality music files
- Supplemental band websites featuring rare recordings
- Reduced price
- Monthly subscriptions
- Single track/ album downloading options
Data analysis
Demographics
Gender
Conducting a frequency analysis on the gender of respondents exhibited that males accounted for the majority at 42 cases, while females accounted for the remaining 33. Table 1.1 illustrates the percentages for each gender.
Table1.1
Age
Following on gender, age was also used as a classification method with a range decided at 18-27. However a small percentage were slightly over the defined parameters. The spread is as follows: 4 respondents were 19 years old, 8 respondents were 20 years old, 11 respondents were 21 years old, 12 respondents were 22 years old, 12 respondents were 23 years old, 7 respondents were 24 years old, 8 respondents were 25 years old, 3 respondents were 26 years old, 5 respondents were 27 years old. Also, the group outside the parameters consisted of 2-28 year olds, 1-29 year old, and 2-30 year olds. Table 1.2 provides an illustration of the age distribution. Table 1.3 shows the cross tabulation of gender and age to further illustrate the demographic breakdown of respondents.
Table 1.2
Table 1.3
Ethnicity
The analysis performed illustrated the distribution of the ethnicity of respondents are as follows: 52% were Caucasian, 18.7% were Asian/Pacific Islander, 14.7% were African American, 5.3% were Latin American, 8% were Other ethnicities, and 1.3% were Native American. Table 1.4 shows the percentage amount for each ethnic group. Table 1.5 also shows the breakdown of different ethnicities by gender.
Table 1.4
Table 1.5
Usage of P2P programs
Our survey also determined the amount of respondents actually used P2P programs. Among the respondents, 63% stated that they do use P2P programs and 37% stated they do not use any file sharing programs. This division is seen in Table 1.6.
Table 1.6
Also, the respondents who use P2P programs were asked to point out the program most frequently utilized; 51% using KaZaA, 18% using WinMx, 16% using iMesh, 4% using Bearshare, and 11% using other programs such as Limeware, DC++, and Overnet. The results are visualized in table 1.7.
Table 1.7
Time spent downloading
Respondents who do use P2P programs were also asked how often they download files from the Internet. The data showed a very large degree of difference in downloading habits. The figures state that 17% use P2P programs daily, 31% use weekly, 26% use monthly, and 26% use every few months. Though there was a large split, about 48% of respondents who use P2P programs download multiple times a month. In table 1.8, the variation in P2P usage is illustrated.
Table 1.8
Data Interpretation
File-Sharing Attributes Rated On Attractiveness: One Sample T-Test
The respondents who engage in P2P file sharing were also asked to rate the attractiveness of various file-sharing attributes. The file-sharing attributes that were rated include the following: a.) Convenience of access to music, b.) Music variety available, c.) Free of cost, d.) Music quality, e.) Free music previews, f.) Access to unreleased material, and g.) Burning CDs with self-selected tracks. They were asked to grade each attribute on a 1-7 scale, with “1” being considered as “Extremely Unattractive” and “7” as “Extremely Attractive.” A One-Sample T-Test was run to compare the means of the attractiveness rating values. The neutral value of 4.00 was used to identify any significant differences from this value. Table 2.1 shows the results of the test.
Table 2.1 test value=4
The results establishes that people find the file-sharing attribute “free of cost” extremely attractive. This was the attribute that people regarded as the most appealing. Convenience of access to music, music variety available, and burning CDs with self-selected tracks were also attributes that people found highly desirable. Slightly less attractive, but still fairly attractive, was access to unreleased material and music quality to people. The only attribute respondents seemed ambiguous about was the free music previews.
Likelihood of Buying Music Files if Special Benefits Were Offered: One Sample T-Test and Independent Samples T-Test
Respondents were asked to rate the likelihood of purchasing music files from official record label websites if special benefits were offered. The benefits that were offered include: a.) Access to high quality music files, b.) Access to rare recordings, c.) Unlimited downloads for a monthly fee, and d.) Single track downloads. Again, a 1-7 scale was used with “1” equaling “Highly Unlikely” and a “7” equaling “Highly Likely”. A one-sample t-test was conducted on the 75 respondents and the results are as follows in Table 2.2.
Table 2.2 test value=4
The test gave evidence that the only benefit offered that might increase the likelihood of people buying files is unlimited downloads for a monthly fee. The remaining attributes show no likelihood that they would effectively attract individuals to the possibility of buying music files on the Internet.
Also, an Independent Samples T-Test was conducted to see if there was any differentiation between people who use P2P and people who do not use P2P on the likelihood of buying files if special benefits were offered. The results are highlighted in Table 2.3.
Table 2.3 *note: equal variance not assumed
The results indicate that there is no significant difference between people who use P2P and people who do not use P2P on the likelihood of buying files if certain special benefits were offered.
Maximum Amount Willing to Pay for Unlimited Downloads and Single Tracks: Descriptives and ANOVA
Respondents were asked if they were willing to pay a monthly fee for unlimited downloads. Those that indicated “Yes” were then asked to state in dollars the maximum price they would pay for this kind of service. Of the 75 total people that were polled, approximately 69% of the respondents stated they were willing to pay a monthly fee for unlimited downloads. The maximum price for this service ranged from $1.00-$30.00 with the average amount being about $13.00.
Analysis of variance was used (ANOVA) to compare means across different before tax annual household income levels and the maximum amount willing to pay for monthly unlimited downloads. The results show that there is no difference between various income groups and the maximum amount people are willing to pay for monthly downloads.
Respondents were also asked if they were willing to purchase single track downloads. This time, only 29% of the respondents said “Yes” to purchasing single track downloads. The maximum price people said they would pay for each individual track ranged from $0.01 to $5.00. The average price for each track was $0.99. Unfortunately not enough people responded Again, ANOVA testing was used to determine the variation of means for prices and various income groups. However, because there were far too few respondents, a proper ANOVA analysis could not be conducted.
Method of Obtaining New Music: One Sample T-Test and Pearson Product Moment Correlation
The respondents were asked to describe their current habits of obtaining new music. The following statements were given: 1.) When I want new music I usually download it using peer-to-peer software. 2.) When I want new music I usually purchase it in a traditional retail store 3.) When I want new music, I usually purchase it from an online retailer. The respondents were then asked to indicate their level of agreement with the statements on a 1-7 scale with “1” being “Strongly Disagree” and 7 “Strongly Agree”. A One-Sample T-Test was run to compare the means between the different statements. The results are shown in Table 2.4.
Table 2.4 test value=4
The results indicate that people usually do not purchase their new music from an online retailer. Also, people seem to be divided between obtaining new music by downloading it using P2P software and purchasing it in a traditional retail store.
Correlation analysis was run between the different methods of obtaining new music and also the ages of the respondents. Using the Pearson Correlation method, results show that there was an almost moderate relationship (-.594) between obtaining new music by “downloading it using peer-to-peer software” and purchasing it “in a traditional retail store” (refer to Table 2.5). This indicates that if people usually indicated strong agreement for one statement, then they would indicate weak agreement with the other statement. However, since the correlation isn’t very strong, the results show that some people do not exclusively obtain music with either method, but use a combination of both. Association between age of respondent and method of obtaining new music was either very weak, or the correlation was not significant enough.
Table 2.5 **correlation is significant at .001 level (2-tailed)
Genres of Music Typically Downloaded: Descriptives and Cross-Tabs
Respondents were given a list of music genres and asked to check the types of music that they download. They were allowed to check all of the music genres that they download. The four most downloaded types of music are Pop, Rock/Metal/Punk, Rap/Hip-Hop, and Dance/Techno/Electronica. Fig 2.6 displays the frequencies of music genres people download.
Figure 2.6
A cross-tab analysis was also conducted to find the associations between the type of music people download and people’s ethnicity, but none of the results were significant enough (under a 95% confidence interval.)
Music Industry’s Legal Actions & Downloading Behavior: Descriptives and Cross-tabs
Respondents were asked “What effect (if any) has the music industry’s legal actions had on you music downloading behaviors?” The choices that were given were: 1.) No longer downloading, 2.) Downloading less/more cautious, 3.) Paying for downloads/only downloading in legal ways, and 4.) No difference. The majority of people either said they were “Downloading less/more cautious” (42%) or the legal actions had “No difference” (49%) in their downloading behaviors. Less people said they were “No longer downloading” (8%) or “Paying for downloads” (1%). The quantified results are illustrated in table 2.7
Table 2.7
A cross-tabs analysis was done to determine the association between effects of legal actions on downloading behaviors and use of P2P programs. The results yielded a high percentage of people downloading less or more cautiously as a result of legal action taken by record companies. Table 2.8 shows the relationship between P2P and non P2P users on the subject.
Table 2.8
Method of Internet Connection and Use of P2P File Sharing: Cross tabs
Respondents indicated that they usually connect to the Internet through: 1.) DSL 41.5%, 2.) Cable 33.8%, 3.) Dial-up 13.8%, 4.) T1 2.7%, and 6.7% Do Not Know their method of connection.
A cross-tab analysis was conducted to see whether there was an association with connection method and whether people use P2P file sharing. There is no significant association between a particular connection method and P2P file sharing. Despite the previous statement, one must note that the majority of respondents use a high-speed Internet Connection (DSL, Cable, and T1), which greatly increases file-downloading speed.
Access to Computers With Downloading Capabilities: Descriptives
Respondents were asked to check off all of the locations that they have access to computers with downloading capabilities. The most chosen location was home, followed by a friends house. Among the respondents, both were chosen considerably more than any other location. Fig 2.9 displays the results.
Table 2.9
Respondents were then asked to cite the location that they most frequently download files from. Overwhelmingly, a majority of individuals download from their home. The next highest group is people who do not use P2P programs at all. Figure 2.9 displays the results.
Table2.10
Limitations
The research provided was carefully conducted and analyzed. However, there are some limitations to the study that needs to be noted:
Sample Size
The sample size that was used was 75 respondents. Generally, for a sample’s statistic to accurately reflect the true value of the population, a sample size of at least 1,000 should be used. However, given the time constraints and resources available this was not possible. Due to this limitation, the results probably have a high sampling error.
Method of Sample Selection
Convenience sampling was used as the method of sample selection in this study. This method allows for the interviewers to draw samples at their own convenience. Because respondents were selected using an arbitrary method, not all members of the population have an equal probability of being selected. This limitation also contributes to high sampling error.
Question #15 is a Poor Question
On the survey, question #15 asked, “Of the following, which best describes your before tax annual household income?” However, no follow-up questions were asked about the individual’s household. It is inconclusive whether or not the respondent lives alone, is married, lives with parents, has children, etc. The failure to clarify this question greatly limits the conclusions one can draw from the results.
Respondent Error
A couple of respondents checked more than one answer for a question where only one option was suppose to be selected. Also, respondents were oftentimes in a hurry when they completed the survey and may not have accurately answered all of the questions. Furthermore, the sensitivity of the topic in regards to legal issues may have caused some respondents not to answer as accurately as possible.
P2P downloading Problem is a Worldwide Issue
The issues of illegal file-sharing are not only restricted to the United States. Even if the music industry were to effectively address this issue in the United States, they would still have to deal with illegal downloading overseas. The global nature of the issue makes it more difficult to pinpoint strategies that would decrease the use of P2P programs and networks significantly. The only hope is to reduce it in the large music markets and lobby organizations formed to help protect intellectual property rights internationally.
Conclusions
The majority of surveyed respondents used P2P file sharing programs at the time they were surveyed. This behavior was observed across all demographics. Of those who download music, a majority used KaZaA while the other P2P programs were fairly well disbursed in the minority. The most appealing attribute of P2P file sharing among our respondents was that it was free of cost. Ranking fairly close behind that was convenience of access to music, the variety of music available, and ability to burn self-selected tracks respectively. Typical music genres downloaded include rap/hip-hop, rock/punk/metal, and dance/techno/electronica. Most respondents usually download from their homes, and utilize P2P file sharing multiple times a month.
When measuring the effect of legal actions by music companies, we found a large percentage of individuals are downloading less or more cautious. In fact, a large majority has been affected by recent actions taken by record companies, and have since decreased their downloading behavior. Of course, there is still a noticeable percentage that has not changed their activities regardless of the action being taken.
In measuring the likelihood of purchasing files from the Internet through record companies, the only attribute likely to attract respondents was the availability of unlimited downloads for a monthly fee. The maximum dollar amount the respondents were willing to pay ranged from $1.00 to $30.00, and averaged $13.00.
Furthermore, our study revealed that a majority of respondents are using high-speed means to access the Internet. A majority report they normally access through either DSL or Cable modem. Though many use these high-speed connections, there is no definite correlation between those who use P2P programs and those who do not. Though most individuals have these high speed capabilities, a majority do not utilize them to purchase music from online retailers.
Recommendations
Our research yielded some excellent insight to the issue of P2P file sharing. The reason for use of P2P was mostly due to four main issues. Also, there was some positive feedback on some of the strategies that could be enacted to utilize the Internet and stop illegal P2P usage. Indeed, these insights have helped us develop several strategies that could be employed to regain revenue lost by the onset of P2P file sharing. These should be implemented immediately, as we are confident they will have a positive effect on the current situation.
Legal action
This strategy has proven to work over the course in which it has been implemented. To this end, we have two recommendations that will increase the impact of the legal action, and help in alleviating the problem in the long run.
- The first strategy involves increasing the prosecution of individuals who use P2P programs to download music. The increased action will continue the trend of people thinking twice about using file sharing programs. Also, if the level of prosecution were increased, even the diehard users would begin to downgrade their usage as their chances of getting caught increase. This will also help deter new users from starting service with the various P2P networks.
- Begin to target the P2P networks as well. If P2P users have no where to download, they cannot be a problem. Those networks based in the U.S. can be prosecuted for compensatory damages ad well as issuing cease and desist orders. If the networks are based in other countries, lobby organizations such as the WTO for more congruent copyright laws.
Monthly Rates
This is actually unheard of for record companies in the present. However, a majority of respondents stated that this is an attractive benefit that could be offered. There are two aspects two consider here.
- The range of maximum per month payment varied greatly. However, the range being $13.00, we recommend a $15.00 fee for monthly usage. However, companies should not offer their entire catalog through these services considering a number of individuals still purchase music from traditional retail outlets. The online network should be viewed as a supplementary source rather than a primary. However, it is a way of minimizing costs, as the production side merges with the production. Also, concentrate on new music, specifically popular genres such as rock, rap, or techno. You could offer 3 to 4 tracks from a new album as a promotional tool.
- Since a majority of people are now using faster connection, i.e. DSL, a partnership could be formed with the ISPs to offer downloadable music to customers of their services. Offering integrated packages for high-speed services, like AOL Broadband, may help in reaching people who do not think of the Internet as a viable medium for music purchase.
In addition
On top of these strategies to utilize the Internet, it would be helpful to reassess previous policies on business conduct. The profit margin for a c.d. is rather large in comparison to most products. It would be prudent to lower the overall cost to the retailer. After all, a significant reason why people use P2P programs is because it is free of cost. If more consumers were faced with reduced prices at the traditional retail stores, it would deter some light users, and thrust them back into the main stream of the marketing channel.
All of these strategies recommended are sound. Being based on careful research of the issue, it would unwise to ignore them. The entire music industry is in transition; these strategies will help ensure survival through the upheaval. It is in the nature of business to be dynamic, and the company that reacts swiftly will ensure their market share for the long-run.