A research paper from the European Commission states that music piracy has hardly any negative impact on the revenues of legal digital music. The paper was released by the European Institute for Prospective Technological Studies and the data on which the results are based comes from the research company Nielsen. They tracked the internet behavior of 16,000 European digital music consumers by tracking the links people clicked for a year.
According to the paper there would an increase in clicks of 2% to legal music websites if there weren't any music piracy websites. The researchers also claim that the vast majority of music downloaded from pirate websites would not have been bought if illegal downloads were not available. They conclude that digital music piracy does not displace legal digital music purchases. So while there are copyright violations, they are not affecting digital music revenues.
While the digital music revenues might not be affected, the music industry has always heavily relied on physical formats. Especially CD's see a rapid decline in revenue. This decline might not only be caused by piracy, for CD's consumers pay more and in return get tracks they might not even want.
Digital download sites offer per-track purchases and offer consumers the option to purchase the tracks they want. And just this fact is currently the reason that the music revenues at its whole are still declining.
The researches conclude, "It is in particular important to note that music consumption in physical format has until recently accounted for the lion's share of total music revenues. If piracy leads to substantial sales displacement of music in physical format, then its effect on the overall music industry revenues may well still be negative". They went on to add, "It is in particular important to note that music consumption in physical format has until recently accounted for the lion's share of total music revenues. If piracy leads to substantial sales displacement of music in physical format, then its effect on the overall music industry revenues may well still be negative".