As one can imagine, many studies have been conducted regarding the relationship between the rise of P2P networks and the drop of CD sales. I have looked at several papers, some come to the conclusion that file sharing actually contributed to more CDs being bought, others attribute atleast some part of the decline of CD sales to file sharing. What some studies also suggest is, that music sales have shifted some what from the majors to smaller labels.
In THE EFFECT OF INTERNET PIRACY ON CD SALES: CROSS-SECTION EVIDENCE, 2004, CESIfo:
[...] we find that music downloading could have caused a 10% reduction in CD sales worldwide in 2001. [...]
The story for 2002 is different, at least for the US, as the number of people downloading music has
only slightly increased. As a matter of fact, our estimates imply a 2% loss in CD sales due to
music downloads, a small number compared to the observed 9% drop in 2002 in the US.
But the paper also points out, that the music industry could benefit:
Besides, there are reasons to believe that the music industry might actually benefit from digital distribution.
Indeed, numerous surveys (documented in Peitz and Waelbroeck 2003b) highlight the potential
sampling role of digital copies. [...] As a result, labels may benefit from file-sharing because, as Peitz and Waelbroeck (2003c) have
argued, they may be able to save on marketing and promotion costs, by letting consumers search
for their most preferred music.
In [The Impact of Digital File Sharing on the Music Industry: An Empirical Analysis] (http://www.bepress.com/bejeap/topics/vol6/iss1/art18/), 2005, Nicholls State University:
Music industry representatives argue that the practice decreases CD sales, while supporters of file-sharing allege the practice could actually increase sales. Using household-level data from the Consumer Expenditure Survey, we find support for the claim that file-sharing has decreased sales.
In Music Sales in the Age of File Sharing:
For younger people, Internet access predicts a decrease in sales. For older people, Internet access predicts an increase in sales. The overall effect of Internet access is positive -- the magnitude of the Internet effect is larger in the older age groups, and the older age groups represent a greater proportion of the population. This strongly suggests
that file sharing is not the cause of the recent decline in the record industry
Even if the RIAA’s lawsuits against file sharers successfully deter people from
sharing music over P2P networks, I would not expect to see a short term increase in sales.
If the older demographic is more responsive to the threat of legal action than the younger
demographic, the lawsuits would even tend to decrease sales in the short run
In File Sharing and International Sales of Copyrighted Music: An Empirical Analysis with a Panel of Countries:
I find that countries with higher internet and broadband penetration have suffered higher drops in music sales, suggesting that music downloads may explain at least part of the recent reduction in sales.
In The Impact of Music Downloads and P2P File-Sharing on the Purchase of Music: A Study for Industry Canada:
In the aggregate, we are unable to discover any direct relationship between P2P filesharing
and CD purchases in Canada. The analysis of the entire Canadian population
does not uncover either a positive or negative relationship between the number of files
downloaded from P2P networks and CDs purchased. That is, we find no direct evidence
to suggest that the net effect of P2P file-sharing on CD purchasing is either positive or
negative for Canada as a whole.
However, our analysis of the Canadian P2P file-sharing subpopulation suggests that
there is a strong positive relationship between P2P file-sharing and CD purchasing. That
is, among Canadians actually engaged in it, P2P file-sharing increases CD purchasing.
We estimate that the effect of one additional P2P download per month is to increase
music purchasing by 0.44 CDs per year.