"The quality of new music has not fallen since Napster."

With issues around Megaupload being in the news, this summary, by Linda Gorman, of an NBER working paper - "Copyright Protection, Technological Change, and the Quality of New Products: Evidence from Recorded Music Since Napster" - from the latest NBER Digest makes the point that "The quality of new music has not fallen since Napster."

Napster was the first widely used program that allowed music lovers to share music by exchanging MP3 files, thereby allowing millions of people to enjoy music without paying for it. Recorded music revenues plunged, raising a concern that piracy would stem the flow of good new music. In Copyright Protection, Technological Change, and the Quality of New Products: Evidence from Recorded Music Since Napster (NBER Working Paper No. 17503), Joel Waldfogel explores the possibility that technological changes in the music industry "may have altered the balance between technology and copyright law for digital products." Despite music industry claims that digital piracy harms consumers by undercutting its revenues and reducing the amount of new music that it can bring to market, he constructs indexes of music quality based on critics' best-of lists, airplay, and sales that show no evidence of a decline in music quality since Napster.

Waldfogel's first index of music quality is based on critics' retrospective lists of the best music (for example, "best of the decade"). It encompasses 88 different rankings from the United States, England, Canada, and Ireland, and covers more than 16,000 musical works from 1960 to 2007. Statistically combining information from these sources results in an overall quality index that rises between 1960 and 1970, declines through the 1980s, rises again in the mid-1990s, declines in the latter half of the 1990s, and is stable for the period after 2000. Waldfogel concludes that although the index was falling prior to the appearance of Napster, it is stable after 2000 and thus shows no evidence of a decline in quality.

His second and third indexes are derived from data on radio airplay and sales of music. Music is aired on radio less, and sells less, as it gets older; but if a vintage is better, it will receive more sales or airplay after accounting for such depreciation. Using data on the frequency with which songs originally released as early as 1960 were aired on the radio from 2004 to 2008, Waldfogel constructs an airplay-based vintage quality index suggesting that music quality rose from 1960 to 1970, fell until at least 1985, and rose substantially after 1999. The analogous sales-based index is derived from Recording Industry Association of America Gold (sales greater than 500,000 copies) and Platinum (sales greater than one million copies) certifications. The sales-based index echoes the result of other indexes: it rises from 1960 to 1970, falls to the 1980s, and then rises sharply after 1999.

Based on the movements of these three indexes over time, Waldfogel concludes that "the quality of new music has not fallen since Napster." The post-Napster flow of product appears to be as strong as or stronger than it was before Napster, with independent labels accounting for a growing share of successful albums. Although it is impossible to determine whether creative output is as high as it would have been without Napster, the evidence does not suggest that innovations in digital technology, and associated changes in effective copyright protection, reduced the quality or quantity of new music.

So the effects of technological changes in the music industry may not be as the industry would have us believe.