Gopal, Bhattacharjee and Sanders (2006)
|Gopal, Bhattacharjee and Sanders (2006)|
|Title:||Do Artists Benefit from Online Music Sharing?|
|Author(s):||Gopal, R. D., Bhattacharjee, S., Sanders, G. L.|
|Citation:||Gopal, R. D., Bhattacharjee, S., & Sanders, G. L. (2006). Do Artists Benefit from Online Music Sharing?*. The Journal of Business, 79(3), 1503-1533.|
|Link(s):||Definitive , Open Access|
|Key Related Studies:|
|Linked by:||Bhattacharjee, Gopal, Lertwachara and Marsden (2006b), Djekic and Loebbecke (2005), Hansen and Walden (2012)|
|About the Data|
|Data Description:||The data used to investigate the propositions were drawn from two sources:
The first data set consisted of primary data collected via a survey (n= 200) and was used to validate consumer choices under various technological and economic parameter settings.
A second data set was developed using the Billboard ranking charts and was used to evaluate the propositions related to the superstar phenomenon and sharing technologies.
|Data Type:||Primary and Secondary data|
|Secondary Data Sources:|
|Data Collection Methods:|
|Data Analysis Methods:|
|Cross Country Study?:||No|
|Government or policy study?:||No|
|Time Period(s) of Collection:||
We present a model of online music sharing that incorporates economic and technological incentives to sample, purchase, and pirate. Contrary to conventional wisdom, we find that lowering the cost of sampling music will propel more consumers to purchase music online as the total cost of evaluation and acquisition decreases. Attempts to prevent sampling will be counterproductive in the long run. Sharing technologies erode the superstar phenomenon widely prevalent in the music business. Extensive empirical investigations, based on surveys and Billboard ranking charts, lend support to the economic model and validate the key results.
Main Results of the Study
The main results of this study are:
- Decreasing sampling costs not only lead more potential consumers to sample unknown music items but also lead more consumers to buy the music items that they have sampled.
- Lower sampling costs have a positive effect on the consumer surplus of samplers, which, in turn, has a positive effect on their purchasing intentions.
- The industry can potentially reverse the effects of online audio piracy by providing more legal and efficient sampling techniques that consumers could use. This is contrary to the anecdotal belief that online availability of digital music leads only to a drain on profitability.
- The impact of music availability online has a differential impact based on the realized value of the music to the consumers. For higher valued songs, online search and sampling capabilities have a beneficial impact on sales. Lower valued music items are pirated more than higher valued items, ceteris paribus, and consequently sales of those suffer.
- Superstars come under increasing threat from two fronts: (a) a greater proportion of sampling of superstar music leads to piracy—users who sample do so with an increased intention to pirate, and (b) decreasing sampling costs lead to an erosion of superstardom. However, there is a greater probability of discovering other high quality music items by lesser known artists with the new technology, which will hurt a superstar’s sales—and, hence, status.
Policy Implications as Stated By Author
"Online music technologies are fundamentally altering the landscape of the music business. While consumers clearly stand to gain from these opportunities, the music industry can also reap significant benefits via effective strategies. Music as an artistic expression transcends economics and the bottom‐line revenues of the music industry. Indeed, as stated by Van Morrison, “Music is spiritual; the music business is not”. Nevertheless, fundamentally sound business models are critical for enabling the social, artistic, and spiritual dimensions of music to flourish."
Coverage of Study
|Level of aggregation:||Students|
|Period of material under study:||2006|
|Level of aggregation:||Recording Artists|
|Period of material under study:||1991-2000|