|Title:||Testing file sharing's impact on music album sales in cities|
|Author(s):||Liebowitz, S. J.|
|Citation:||Liebowitz, S. J. (2008). Testing file-sharing's impact by examining record sales in cities. Management Science, 54(4), 852-859.|
|Link(s):||Definitive , Open Access|
|Key Related Studies:|
|Linked by:||Andersen and Frenz (2010), Cox, Collins and Drinkwater (2010), Danaher and Smith (2013), Hammond (2012), Zentner (2009)|
|About the Data|
|Data Description:|| This econometric investigation uses several data sets.
First, the US Census as part of its Current Population Survey (CPS) undertaken for the Bureau of Labor Statistics conducts surveys on Internet and Computer use. These surveys, conducted in December 1998, August 2000, September 2001, and October 2003, provide information on the penetration of home internet use, the type of internet connection, household family income, Metropolitan Statistical Area (MSA) of residence, the age, sex, race and education of respondent, as well as a host of other variables that were not used in the analysis. This information is based on responses from approximately 130,000 individuals. The size of the sample in small MSAs is sometimes insufficient to provide accurate estimates for various demographic data.
Second, Nielsen SoundScan data on album sales, by genre and by year, for the largest 100 metropolitan areas, which it refers to as Designated Market Areas (DMAs) of which there are 210 covering the entire country.
Third, Nielsen Media Research data on television viewing in DMAs (DMAs are based on television markets).
Finally, Arbitron data on radio listenership from its own set of metro areas.
|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:||
Although previous forms of copying have been found to often have benign effects on copyright owners the rise in file-sharing has coincided with a steep decline in the sale of sound recordings. This paper attempts to empirically examine the extent, if any, to which file-sharing has caused the decline in record sales. Using a data set for 99 American cities containing information on Internet use, record sales, television viewing, radio listening, and other demographic variables, an econometric analysis is undertaken to examine the relationship between record sales and file-sharing, as proxied by Internet use, from 1998 to 2003.
First, we find that the Internet itself reduces time spent on other entertainment activities, but only by a small amount. We then subtract this generic Internet impact from the overall Internet impact and conclude that the decline associated with that component of Internet use that we can attribute to file-sharing indicates that file-sharing has caused the entire decline in record sales and appears to have vitiated what otherwise would have been growth in the industry. Looking at sales in individual musical genres reinforces the primary conclusion since those genres that seem most likely to fall prey to file-sharing have the strongest measured negative impact from Internet usage.
Main Results of the Study
The main results of this study are:
- Our results indicate that file-sharing indeed has caused the decline in record sales that coincided with the advent of file-sharing.
- Examining the impact of Internet penetration on usage of the two most popular forms of entertainment, television viewing and radio listening, led to a conclusion that the Internet did indeed reduce consumption of these activities, although by a relatively small 7 to 13 percent.
- The reduction in sales due to file-sharing appears to be larger than the actual measured decline in record sales—the regression results indicate that file-sharing not only reduced sales but also vitiated an increase that otherwise would have occurred.
- The regressions imply that except for filesharing, there would have been an increase in record sales from 1998 through 2003 that was quite close to the historical industry average.
- This analysis was repeated for individual genres of music. The results were consistent with basic intuition about different genres’ affinity for file-sharing. This would rule out alterative explanations of the sales decline that didn’t point to the same set of culprits as those involved with file-sharing.
- The result of Internet file-sharing is damaging to business models, not by a superior replacement but by a parasitic use of an otherwise productive technology.
- These problems may become far worse if other markets, such as movies and computer software, were to be sucked up in the file-sharing vortex
Policy Implications as Stated By Author
Coverage of Study
|Level of aggregation:||Individual|
|Period of material under study:||1998-2003|
|Level of aggregation:||Focus of the study is the domestic market for recorded music in the USA.|
|Period of material under study:||1998-2003|