An online music store is an online business which sells audio files, usually music, on a per-song and/or subscription basis. It may be differentiated from music streaming services in that the music store offers the actual music file, while streaming services offer partial or full listening without actually owning the source file. However, music stores generally offer partial streaming previews, some even with full length.

Listening to record producers or music industry executives, you would think that the advent of free online digital music file sharing was the death knell for artists making a living from their music.

On the other hand, proponents of file sharing networks such as Napster and Kaaza argue almost the exact opposite — that the effect, if there is any, is a positive one, as someone who downloads a song online and likes it is more likely to then buy the whole album from the CD store. The free download, in effect, gives the opportunity to sample before buying.

A new mathematical model published in Management Science, the flagship journal of the Institute for Operations Research and the Management Sciences (INFORMS), suggests that the truth is somewhere in the middle, and also provides a glimpse into the changing music business.

The Effect of Digital Sharing Technologies on Music Markets: A Survival Analysis of Albums on Ranking Charts by a collection of authors from the University of Connecticut, California Polytechnic State University and Carnegie Mellon University, suggests that although file-sharing does not reduce the sales of albums that debut high in the Top 100 sales charts, it does have a negative impact on lower-ranked albums.

They found that there is significantly reduced chart survival for all albums except those that debut high in the charts. This group can include those simply lucky enough to debut highly, superstars (Robbie Williams, Take That, etc.), and those with a big publicity machine behind them. Interestingly, they also found that female artists exhibit enhanced survival and that there is now a narrowing of the advantage held by major labels over independent labels. "These results point to increased risk from rapid information sharing for all but the 'cream of the crop'," said the authors.

The authors used what is known as a survival model and drew their data from the Billboard Top 100 chart. Underlying the model is a week-by-week stochastic process that governs when an album exits the charts. They assessed the impact of explanatory variables including the debut rank of the album, the reputation of the artist, whether or not a major or minor label was promoting and distributing the album, artist descriptors such as whether the artist is a group or a soloist, and holiday month debut.

The data was sliced before and after the period between 1998 and 2000 which saw the rise of the MP3 digital music format that can be used on portable music players, the birth of Napster — the first of the major tools to share music online — and the Digital Millennium Copyright Act.