Music First: Radio does not sell records

According to a study by Stan Liebowitz for the Center for the Analysis of Property Rights and Innovation linked (but apparently now removed) from the Music First coalition website's FAQ states:

Radio does not have the positive impact on record sales normally attributed to it. Instead, it appears to have an economically important negative impact, implying that overall radio listening is more of a substitute for the purchase of sound recordings than it is a compliment.

A more detailed abstract of the study:

This paper undertakes an econometric investigation of the impact of radio play on sales of sound recordings using a sample of American cities. The results indicate that radio play appears to have an economically important negative economic impact, implying that overall radio listening is more of a substitute for the purchase of sound recordings than it is a complement. This research exposes an important fallacy of composition in applying to the entire market a conclusion based upon the positive relationship between radio broadcasts of particular sound recordings and the sales of those particular sound recordings. This finding imposes a more complete view of the implications of economic suggestions to allow the radio/record market to function unhindered by government regulations.

Unfortunately, I didn't get to read the full study before they took it down. (Maybe they took it down because they didn't have the proper copyright clearances to publish it on their site, oh the irony.) But radio Consultant Mark Ramsey, who did read the whole thing, makes this comment:

Even if we accept the conclusion that some radio listeners don't buy music and further accept that radio satisfies whatever need they have, the author of the study doesn't acknowledge the tangible difference between the stealing of music via P2P and the fact that radio stations do indeed already pay considerable license fees to play the music industry's content on the public airwaves. This notion that radio is getting something for nothing is downright offensive.

After a bit of searching, I tracked down an online preliminary version of this report (PDF) if you want to read it yourself.

Stan Liebowitz has flip-flopped about similar issues in the past, writing a paper for the CATO institute that said MP3s were killing music, then saying in 2002 the decline in music sales was in sync with the overall decline in the economy, but then in 2003 blaming MP3s for declining music sales again, based on data supplied by the RIAA.

I guess I'm just curious about how the record industry thinks people find out about new music, if it's not over the radio, or from file sharing, or what. How many people are going to want to buy something they haven't heard about?