Economist.com

GLOBAL sales of recorded music fell by 8% in 2007, according to figures released in June by the International Federation of the Phonographic Industry, a trade group. It blamed 70% of the decline on “file-sharing” software, which allows internet users to exchange music and video without paying for it. Industry groups have sued thousands of users of such software, and have supported legislation to criminalise it. But file-sharing has so far proved impossible to stop. And it is not all bad news for the industry, because it can provide helpful insights into music-lovers’ interests.

For every song that is bought legally, in shops or online, around 20 songs are illegally downloaded, according to BigChampagne, a firm based in Beverly Hills, California, that compiles and sells statistics about file-sharing. Its customers can find out how many times, and where, a song has been illicitly downloaded, for example, what the figure was five weeks ago, what other music its fans like, and so on.

“It doesn’t make sense to put your head in the sand,” says Ken Bunt, head of marketing at Disney’s Hollywood Records, a BigChampagne customer. One of Hollywood Records’ artists, Jesse McCartney, is particularly popular in Italy, so that might be a good place for a tour, says Mr Bunt.

David Ross, the editor of Music Row, the largest country-music trade journal, based in Nashville, Tennessee, says the “anti-intellectual argument” not to use such data is emotional nonsense. Music Row publishes file-sharing figures, as well as conventional charts. Such information can help managers promote their artists. Jennifer Bird of Red Light Management, a management agency in Los Angeles, says her agency knows the names and geographic destinations of the 7.5 billion songs swapped in 2007. That is a big help if you are trying to work out whether people are raving about an artist—or merely about a song. And planning joint tours is easier when you know what other music an artist’s fans listen to.

BigChampagne’s latest venture, launched this month, extends its monitoring to television programmes and films, which are also widely shared online. Knowing what is popular among file-sharers could help broadcasters and film studios when negotiating with advertisers, for example. Hulu, a website operated by News Corporation that offers free, advertising-supported video-streaming, already uses file-sharing statistics to design its programming and to set advertising rates.

Many music executives were reluctant to take advantage of file-sharing statistics because of the trouble the technology has caused in the industry, says Eric Garland, BigChampagne’s boss. TV stations and film studios, by contrast, are “sprinting through the stages of grief”—and coming to terms with the reality that details of the illegal use of their material can, in fact, be very useful indeed.