To begin with we should establish that by definition sharing a Cd or selected tracks from a Cd is actually a copyright infringement. Even if you do not gain financially you are allegedly preventing a sale from happening. Thus you are possibly preventing an artist and their label from profit. A purchase of music is supposed to be for your private use only.
Despite this as far back as 8 track tapes people have shared duplicated recordings with their friends and the music merchants didn't blink an eye. The main concern was music piracy from distributors and seedy producers. They considered the sharing as a promotional impact on their sales. Which I believe to be true. I know that probably 9 times out of 10, I went and purchased the actual record because I liked what my friend taped for me. And the same with my friends. Inevitably they would buy the music I shared with them.
So in those years many record companies and artists saw this as a way to increase revenue and exposure. Let's say you sold 100,000 Cd's and from that 40,000 people "shared" 60,000 copies. At first glance one may conclude " Oh my we just lost 60,000 potential sales." Keep in mind that "potential sales" is a subjective term. Technically speaking that does not mean you lost any money. In fact you didn't lose any money because you did not give anything away. Still some artists considered the 60,000 copies as losing money even though there is no way of quantifying that. Then if you consider that as a direct result of those shared tapes you sold 30,000 more copies of your record than you can say you gained an additional 30% boost in sales. It is almost like the people advertised for you at no cost to you.
In fact pharmaceutical companies have practiced this for years on top of their commercial advertisement. Suppliers give Doctors closets full of medicines to give to patients knowing that the Doctors will than in turn prescribe those medicines too people who responded positively. You never hear a pharmaceutical company deny the effectiveness of this method.
As years progressed however things changed in the minds of some. In the "old" days you didn't share music with that many people but the computer files multiplied the music sharing in an enormous percentage. That is when bands like Metallica started screaming foul play. On the other hand "old schoolers" viewed this just a larger arena that would accomplish the same results as before. In fact some artists like Phish would put their own files on line for people to download. They claim that this increased their sales and popularity.
Two very interesting aspects of the computer development hits me like a brick though. In terms of record sales the Record Label stands to lose the most money from people not buying a record they put out. Their royalty is the largest piece of the pie. They did not seem to have as adverse of a reaction as the artists who were staunchly opposed to file sharing. Obviously the fact that on line download services charge a fee shows that some felt there was a balance in there somewhere. Of course you can still share a file with a friend or find free downloads. By and large though it seems that many people who download music still end up buying the Cd. Yes many feel they sell more Cd's because of P2P file sharing.
Except the newer generations do not have the same attachment to a Cd as in days gone by. So the second point comes front and center. With MP3 players, other digital players, and satellite services a physical product is less desirable then ever before. So this debate will continue on into the future as more kids of coming generations do not even listen to Cd's anymore.
In theory there will one day be no need for a recorded product in hand. You will play your digital player at home, in the car, and carry it around and play it in you ear. So the downloading industry will explode even more. Some say that record companies will then have less expenses in releasing material since they may not have to press a Cd and ship it out for sale. But how much will they charge for a full blown digital product?
Should prove to be interesting.
