Friday, Ed Felton posted a look at results from a study of the impact of Internet usage on CD sales and concluded

For people in the 15-24 age group, he [Eric Boorstin, a senior at Princeton] found a significant negative correlation between Internet adoption and CD sales. For people in all of the age groups older than 25, he found the opposite—a significant positive correlation between Internet adoption and CD sales. Overall, the correlation was significantly positive—metro areas with higher rates of Internet adoption had significantly higher CD sales.

The explanation cannot be that higher income predicts both Internet adoption and CD sales; remember that Eric controlled for differences in income. There must be something about Internet access, other than income, that correlates with CD purchasing. Perhaps it's filesharing; perhaps it's something else; or perhaps it's a combination of both. Overall, each additional Internet user in a metro area correlated with 3.5 additional CDs sold.

Now today, he [Felton] has published his Grand Unified Theory:

The Grand Unified Theory explains the study results by breaking down the users of filesharing into two subpopulations, which I will call Free-riders and Samplers.

Free-riders are generally young. They have few if any moral qualms about filesharing, and they tend to assume that others feel the same way. They use filesharing to accumulate libraries of music, as an alternative to buying CDs.

Samplers are generally older and more risk-averse. They are highly engaged with cultural products of all sorts. They are morally conflicted about filesharing, and use it mostly to download songs that either aren't for sale, or that they don't value enough to pay for. They buy music that they really like, and filesharing causes them to find more music they like, so it tends to increase their CD purchases.

I'm not sure if this explanation will hold up, but I have a very hard time believing that file-sharing doesn't result in more CD sales, and that record companies actually promoting file-sharing wouldn't result in many more CD sales.