Every 47th Play on Spotify Reduces Piracy by One Illegal Download, Study Says

But every 137 plays costs the music industry one purchase.

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Oct 28 2015, 3:07pm

Photo: David Hale Smith/Flickr

The European Commission just released new research showing Spotify actually does reduce music piracy, which Spotify has argued since its inception.

Research published by the European Commission's Joint Research Centre compared streaming data and illegal downloads for 8,000 different artists from 2013-2015. It found that for every 47 streamed plays an artist receives, the number of unpaid downloads drops by one.

"This piracy displacement is consistent with [Spotify CEO Daniel Ek]'s claim that Spotify's bundled offering harvests revenue from consumers who—or at least from consumption instances—were previously not generating revenue," the researchers said in their report.

Spotify's streams also cancel out the lost sales in terms of revenue, according to the research. "Given the current industry's revenue from track sales ($0.82 per sale) and the average payment received per stream ($0.007 per stream), our sales displacement estimates show that the losses from displaced sales are roughly outweighed by the gains in streaming revenue."

On the flip side, this doesn't mean the music industry is making any more money. The study also looked at the numbers for paid downloads, and determined that for every 137 Spotify streams, the number of paid downloads also decreases by one.

As Taylor Swift argued when she pulled her catalog from the streaming service, Spotify may still be setting a precedent for listeners to see music as something that should be free, and devaluing the efforts of musicians.

It's important to take this research with a grain of salt, as it's based on only a few years of data. As Spotify continues to rise in popularity, the data may change, and its presence may have more negative effects on the record industry.