|Title:||Will MP3 downloads Annihilate the Record Industry? The Evidence so Far|
|Author(s):||Liebowitz, S. J.|
|Citation:||Liebowitz, S. (2004). Will MP3 downloads annihilate the record industry? The evidence so far. Advances in the Study of Entrepreneurship, Innovation, and Economic Growth, 15, 229-260.|
|Link(s):||Definitive , Open Access|
|Key Related Studies:|
|Linked by:||Andersen and Frenz (2008), Bhattacharjee, Gopal, Lertwachara, Marsden and Telang (2007), Blackburn (2004), Bounie, Bourreau and Waelbroeck (2007), Liebowitz (2005), Liebowitz (2006a), Liebowitz (2006b), Michel (2005), Peitz and Waelbroeck (2004), Sandulli (2007), Sandulli and Martin-Barbero (2007)|
|About the Data|
|Data Description:||Data on quantities of records sold in the US on a yearly basis and on revenues is taken from the Recording Industry Association of America.|
|Data Type:||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:||
This paper investigates the impact of unauthorized downloading of MP3 files on the recording industry. Although the no longer extant Napster was the most famous system used for such downloading, its progeny have continued to allow millions of music listeners to download music (and other) files without remuneration to the copyright owners. Using data on the historical sales of prerecorded music I examine in detail the recent decline in record sales and attempt to gauge the importance of various alternative factors that have been put forward to explain this decline. I conclude that the evidence supports a claim that MP3 downloads decrease sales.
Main Results of the Study
- MP3 downloads are causing significant harm to the record industry, but it is not clear whether such downloading in the current legal environment will cause a mortal blow to the industry.
- One of the causes of the decline in record sales is the decline of singles that has been ongoing for quite some time.
- Changes in media might be thought to lead to changes in demand due to a ‘librarying’ motive that would consist of individuals wishing to update some of their favorite recordings to the new medium, though empirical support for this is mixed.
- Prices for records have remained consistent during the last 20 years; another reason for changes in record sales might be due to decline in income.
Policy Implications as Stated By Author
- It is important to understand the impact of MP3 downloads if we, as a society, are to determine appropriate responses to allow the record companies to take in defending their economic position from the encroachments brought about by MP3 downloads.