Nothing new in Liebowitz paper


Like everyone else in the radio and/or records trade press we saw the BusinessWeek story last week about the report by University of Texas at Dallas economics professor Stan J. Liebowitz which concluded that the conventional wisdom of radio air play increasing record sales is dead wrong – that, rather, air play decreases record sales. Unlike the rest of the trade press, we decided to read the research paper that Liebowitz had published before commenting on it. We assumed it would contain some new research to support his striking conclusion. Our assumption was wrong.

There is, quite frankly, nothing new in the report. Rather, Liebowitz reviews a lot of studies on the impact of other technologies, such as VCRs, which may or may not have any relationship to the topic at hand. The professor assumes that they do. Then he looks back at historic data on record sales to show that the advent of radio in the 1920s depressed record sales. He'll find no argument on that, but much of early radio was more like TV today – dramas, soap operas, variety shows, sitcoms and such. So, while it was true that the new audio medium served as a replacement for listening to an existing audio medium, the phonograph, that does nothing to disprove the conventional wisdom that music radio became the primary vehicle for introducing new music releases and, in effect, advertising them for the record companies.

If there were no radio (nor any satellite radio, MTV, Internet streaming or anything else) to introduce new music recordings to the listening public, would they, as Liebowitz assumes, buy lots more CDs or MP3 downloads to listen to while driving? Or, would they listen a lot more to their old favorites, occasionally adding a new cut when the slow processes of written reviews or word-of-mouth promotion reached them?

"If listening to radio were treated as substitutes for listening to prerecorded music then simple arithmetic might suggest that five times as many records would be sold if radio didn't exist." That was the sentence in Liebowitz's paper that got the most press last week. We offer you the sentence which follows immediately thereafter: "Although we shouldn't take the math seriously, the possibility of harm is certainly worth examining." Unfortunately, the examination by Professor Liebowitz has provided no enlightenment.