|Title:||A study of on-line piracy and recorded music sales|
|Citation:||Blackburn, D . (2004). A study of online piracy and recorded music sales. Harvard University, Working Paper.|
|Key Related Studies:|
|Linked by:||Leung (2012), Liebowitz (2005), Liebowitz (2006b), Mortimer, Nosko and Sorensen (2012), Sandulli (2007), Tanaka (2004), Van Eijk, Poort and Rutten (2010), Waldfogel (2009), Zentner (2005), Zentner (2009)|
|About the Data|
|Data Description:||Data set combining data on national-level sales data with data on file sharing activity over more than 60 weeks.|
|Data Type:||Secondary data|
|Secondary Data Sources:|
|Data Collection Methods:|
|Data Analysis Methods:|
|Cross Country Study?:||No|
|Government or policy study?:|
|Time Period(s) of Collection:||
Ever since the introduction of Napster, the impact of file sharing on the music industry has been the focus of intense debate. The availability of songs on file sharing networks has two competing effects on sales that are likely to vary across artists. First, there is a direct substitution effect on sales as some consumers download rather than purchase music. Second, there is a penetration effect which increases sales, as the spread of an artist’s works helps to make the artist more well-known throughout the population. The first effect is strongest for ex ante well-known artists, while the second is strongest for ex ante unknown artists. Thus file sharing reduces sales for well-known artists relative to unknown artists. Taking account of this heterogeneity in estimating the effect of file sharing provides strong evidence of this distributional effect. Additionally, I find a large aggregate negative effect on sales not apparent in previous work that failed to account for the differential impacts on more and less wellknown artists. The overall negative impact of file sharing arises because aggregate sales are dominated by sales of well-known artists. Using my estimates of the effect of file sharing, counterfactual exercises suggest that the lawsuits brought by the RIAA have resulted in an increase in album sales of approximately 2.9% during the 23 week period after the lawsuit strategy was publicly announced. Furthermore, if files available on-line were reduced across the board by 30%, industry sales would have been approximately 10% higher in 2003.
Main Results of the Study
- Naïve estimates which do not allow for the effect of file sharing to differ systematically across artists yields results similar to those found in the literature previously, suggesting that file sharing has not had a significant effect on the sales of recorded music.
- Further inspection, however, reveals that it is unrealistic to believe that the effects of file sharing are constant across all artists as the costs and benefits of file sharing differ with the ex ante popularity of the artist. This suggest that ex ante unknown artists are likely to see more positive overall effects of file sharing than ex ante popular artists are.
- Furthermore, the differential effect of file sharing on the sales of artists of different levels of ex ante popularity has led to a dramatic shift in the distribution of sales among artists, as new and less popular artists are now selling more records while star artists have seen their sales shrink, compacting the distribution of outcomes.
Policy Implications as Stated By Author
The RIAA’s strategy of suing individual file sharing users leads to reduced file sharing activity and sizeable increases in sales.
Coverage of Study
|Level of aggregation:||Music albums|
|Period of material under study:||2002-2003|