Andersen and Frenz (2010)
|Andersen and Frenz (2010)|
|Title:||Don't Blame the P2P File-Sharers: The Impact of Free Music Downloads on the Purchase of Music CDs in Canada|
|Author(s):||Andersen, B., Frenz, M.|
|Citation:||Andersen, B. and Frenz, M. 2010. Don't Blame the P2P File-Sharers: The Impact of Free Music Downloads on the Purchase of Music CDs in Canada. Journal of Evolutionary Economics, 20, 715-740.|
|Key Related Studies:|
|Linked by:||Barker (2012a), Barker (2012c), Barker and Maloney (2012)|
|About the Data|
|Data Description:||Data collection was conducted by Decima Research in 2006. The total number of survey responses was 2,100. For a detailed discussion on the sampling and interviewing techniques, see Decima Research (2006).
The initial dataset contains 1,005 respondents who declared that they were P2P downloaders and 1,095 who declared not to have engaged in P2P downloading
|Data Type:||Primary data|
|Secondary Data Sources:|
|Data Collection Methods:|
|Data Analysis Methods:|
|Cross Country Study?:||No|
|Government or policy study?:||No|
|Time Period(s) of Collection:||
This study measures the extent to which P2P file-sharing activities act as substitutes or complements to music purchases in markets for CDs. The paper breaks with the mainstream economics approach which dominates the music file-sharing discussion. Whereas such models assume relationships at the micro level (e.g. between file-sharing and purchases) based on observations made at the macro level, our evolutionary economics approach measures the direct effects using micro data representative of the Canadian population. The behavioral incentives underpinning free music downloading, novel to this paper, are the multiple effects of: ‘unwillingness to pay’ (market substitution), ‘hear before buying’ (market creation), ‘not wanting to buy a whole album’ (market segmentation), and ‘not available in the CD format or on electronic pay-sites’ (market creation). Although the two first mentioned incentives significantly influence CD album purchases—i.e. there is a negative and significant market substitution effect and a positive and significant market creation effect—on the whole, these two effects ‘cancel’ one another out, leading to no association between the number of P2P files downloaded and CD album sales.
Main Results of the Study
Tested 3 hypothesis:
- There is a negative relationship between the perceived price of CD albums and number of CD albums bought.
- There is a negative relationship between ‘free music downloads and P2P file-sharing’ and CD sale. (included 5 sub hypothesis)
- There is a positive relationship between income and CD album purchasing.
- Based on the findings, the authors argue that P2P file-sharing behavior may not be bad news for the industry, because such activities create a range of new business opportunities.
- The paper does not find that P2P downloads are associated with fewer CD album purchases.
- The authors found a positive sampling or market creation effect of P2P activity on CD album purchases. Market creation is when people want to test out the product before buying it.
- The authors also found a negative CD market substitution effect. Where P2P activity was motivated because CD albums were perceived as being too expensive, such downloads displaced CD sales.
- A strong taste for music, measured as the selfassessed interest in music, is positively related to music purchasing
- The positive sampling or market creation effect and the negative sampling effect cancel one another out.
- The authors also conclude that music purchasing in general takes up too low a share of peoples’ income to have any effect on purchasing behavior
Policy Implications as Stated By Author
- Seemed to suggest that the overall impact of file-sharing on music purchases was negligible so there would be no need to have punishemnt regimes for filesharing, never explicitly stated by the authors however.
- Suggest that industries can use file-sharing as an opportunity to expand business opportunities.
Coverage of Study
|Level of aggregation:||Individual|
|Period of material under study:||2006|