The major labels are reporting another significant drop in CD sales in 2002. Sales have declined 5 or 7% each year for the past three. This is a big deal. Economist Stan Liebowitz argued last year that there was not yet evidence suggesting any significant effect of file-sharing on CD sales, but as each year passes and sales continue to drop, the evidence points more and more to consumer piracy being a problem. Though I (and most of my friends) use P2P for sampling purposes, and continue to buy records, I certainly know many people who are buying next to zero albums.

This article in the Christian Science Monitor suggests that the indies are making money, however. It's got no metadata from CIRPA or other indie-label groups - for all we know, the majority of indies could be reporting losses - but the article paints things in a happy light. If savvy indepenent labels are indeed making money - and by saving precisely the costs that make the majors so horrible - then I'm really happy. I'm not one of those who is opposed to the concept of a record label: I think they are valuable institutions through which artists may gain support, exposure and resources for their music. That said, I loathe the habits of many (particularly major) labels, who waste so much money on CEO salaries, limos, videos, and radio-play, at the expense of artist development and musical integrity. The artists suffer - in debt to their label, the victims of creative veto. The public suffers - artists aren't fostered, they're simply mined for hits.

Still, I don't hope that P2P obliterates the world's record labels (or the ability for artists to make money through recordings). I've long been an advocate of a flat-tax on computers, burners, internet and recordable media, as a way of helping artists to cope with P2P-related losses. (Similar things have already been instituted in Canada - blank tape levies as the trade-off for home taping.) Though it's perhaps not an enormous issue today, within ten years, the files you download will likely be absolutely identical to the product you might purchase: we need to address KazAa's challenge before it's a crisis. If frugal indie labels (and thus, their artists) are making money regardless of file-sharing, this is doubly great; anything that helps to sustain quality career musicians, whose work is being appreciated, is worthwhile.