|Title:||Profit leak? Pre-release file sharing and the music industry|
|Citation:||Hammond, R. G. (2012). Profit leak? pre-release file sharing and the music industry supplementary appendix.|
|Key Related Studies:|
|Linked by:||Aguiar and Martens (2013)|
|About the Data|
|Data Description:||The data is drawn from both primary and secondary sources. The primary source data is taken from a search of Bit Torrent Tracker for 5 weeks from May 25th 2010.
The tracker was searched for the following information relating to leaked albums: if the album had leaked, the day, hour, and minute that the album leaked; the number of cumulative downloads of the album; the number of current seeders; and the number of current leechers. On each successive Tuesday, the data collection process was repeated for the albums that were released that day and the number of cumulative downloads, current seeders, and current leechers for the albums that were released in the previous weeks.
Of the 1,095 albums in the data set, 991 (90.5%) of the albums leaked and 655 (59.8%) of the albums leaked prior to their release date.
The secondary data was album sales data relating to leaked albums for the first 6 weeks after release. This data was purchased from Nielsen SoundScan under a non-disclosure agreement.
|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:||
It is intuitive that the potential for buyers to obtain a good without remuneration can harm the producer of the good. I test if this holds empirically in the music industry using data from an exclusive file-sharing website that allows users to share music files using the BitTorrent protocol. These are the most reliable file-sharing data available because they are from a private tracker, which is an invitation-only file-sharing network.
To overcome the endogeneity of the number of downloads, I exploit variation in the availability of sound recordings in file-sharing networks to isolate the causal effect of file-sharing on music sales. The results strongly suggest that the aggregate effect of file-sharing is precisely estimated to be extremely small. The direction of the effect is positive but its magnitude indicates that file-sharing does not increase or decrease aggregate sales in the music industry. I conclude with an investigation of the distributional effects of file-sharing on sales and find that file-sharing benefits more established and popular artists at the expense of newer and smaller artists. These results are consistent with recent trends in the music industry.
Main Results of the Study
The main results of this study are:
- File sharing does not increase or decrease sales in the music industry but that this aggregate impact masks important distributional effects.
- The results suggest that established/popular artists benefit from file sharing, while new/small artists do not. In particular, file sharing redistributes sales toward artists in the pop genre and away from artists in niche genres such as indie music.
- The effects of file sharing are meaningfully positive for artists who have had an album sell at least 100,000 units but not for artists who have not. Likewise, the effects are meaningfully positive for artists who have released more than three albums but not for newer artists.
- These distributional effects are likely to have important consequences for the ability of the music industry to continue to produce sound recordings that cater to a large variety of tastes among heterogeneous music consumers.
Policy Implications as Stated By Author
While the study focuses on the short-run consequences of file sharing on sales and the distribution of sales between new/small artists and established/popular artists, the author highlights the importance of investigating long-run effects. To understand how a shift toward more established artists will affect the trajectory of the music industry, one must conjecture how major and independent labels will respond to the increasingly top-heavy landscape that is predicted by these findings. It is arguable that one should expect increasing concentration of recording and distribution labels and it would be worthwhile to investigate how much of the increased concentration that has already occurred can be explained by file sharing.
Coverage of Study
|Level of aggregation:||Focus of the study is the domestic market for recorded music in the USA.|
|Period of material under study:||2010|