McKenzie (2009)

From Copyright EVIDENCE

Advertising Architectural Publishing of books, periodicals and other publishing Programming and broadcasting Computer programming Computer consultancy Creative, arts and entertainment Cultural education

Film and motion pictures Sound recording and music publishing Photographic activities PR and communication Software publishing (including video games) Specialised design Television programmes Translation and interpretation

1. Relationship between protection (subject matter/term/scope) and supply/economic development/growth/welfare 2. Relationship between creative process and protection - what motivates creators (e.g. attribution; control; remuneration; time allocation)? 3. Harmony of interest assumption between authors and publishers (creators and producers/investors) 4. Effects of protection on industry structure (e.g. oligopolies; competition; economics of superstars; business models; technology adoption) 5. Understanding consumption/use (e.g. determinants of unlawful behaviour; user-generated content; social media)

A. Nature and Scope of exclusive rights (hyperlinking/browsing; reproduction right) B. Exceptions (distinguish innovation and public policy purposes; open-ended/closed list; commercial/non-commercial distinction) C. Mass digitisation/orphan works (non-use; extended collective licensing) D. Licensing and Business models (collecting societies; meta data; exchanges/hubs; windowing; crossborder availability) E. Fair remuneration (levies; copyright contracts) F. Enforcement (quantifying infringement; criminal sanctions; intermediary liability; graduated response; litigation and court data; commercial/non-commercial distinction; education and awareness)

Source Details

McKenzie (2009)
Title: Illegal Music Downloading and Its Impact on Legitimate Sales: Australian Empirical Evidence
Author(s): McKenzie, J.
Year: 2009
Citation: McKenzie, Jordi. (2009). Illegal music downloading and its impact on legitimate sales: Australian empirical evidence. Australian Economic Papers, 48(4), 296-307.
Link(s): Definitive , Open Access
Key Related Studies:
Discipline:
Linked by: Martikainen (2011)
About the Data
Data Description: The data set is compiled from weekly Top 40 (digital) and Top 50 (physical) singles charts as released each Sunday by the Australian Recording Industry Association (ARIA) covering fifteen weeks from 5 November 2007 through 11 February 2008. The full sample of 1350 observations (600 digital and 750 physical).
Data Type: Secondary data
Secondary Data Sources:
Data Collection Methods:
Data Analysis Methods:
Industry(ies):
Country(ies):
Cross Country Study?: No
Comparative Study?: No
Literature review?: No
Government or policy study?: No
Time Period(s) of Collection:
  • 5 November 2007 through 11 February 2008
Funder(s):

Abstract

This paper explores illegal music file-sharing activity and its effect on Australian sales of singles in the physical and digital retail markets. Using fifteen weeks of Australian Recording Industry Association weekly chart rankings of physical and digital sales, combined with a proxy for download activity derived from the popular peer-to-peer (P2P) network Limewire, the evidence suggests no discernible impact of download activity on legitimate sales. Whilst significant negative correlation between chart rank and download activity is observed in the digital market, once download endogeneity is purged from the model and song heterogeneity is controlled for no significant relationship remains.

Main Results of the Study

  • There is no evidence of relationship between the downloading and sales in the physical sales market but there is a significant negative relationship with the digital market.
  • Results point towards market segmentation.
  • The econometric results reveal, however, that once the regression methodology accounts for song fixed effects, week fixed effects, and the endogenous (illegal) download variable no significant negative relationship remains. This finding may be cautiously interpreted as (illegal) downloading activity having no effect on sales in either the physical or digital markets.


Policy Implications as Stated By Author

The problem of illegal downloading has recently caught the attention of the recently elected Australian Labor Government who is considering a three strike policy to deal with repeat offenders similar to the system recently employed in the UK. Under this arrangement ISPs would have to police users and take action against those who access pirated material, and would see them warning, suspending, and finally cancelling internet access under the three strike system. It is evident that this is an important issue and one that has many stakeholders to consider.


Coverage of Study

Coverage of Fundamental Issues
Issue Included within Study
Relationship between protection (subject matter/term/scope) and supply/economic development/growth/welfare
Green-tick.png
Relationship between creative process and protection - what motivates creators (e.g. attribution; control; remuneration; time allocation)?
Harmony of interest assumption between authors and publishers (creators and producers/investors)
Effects of protection on industry structure (e.g. oligopolies; competition; economics of superstars; business models; technology adoption)
Understanding consumption/use (e.g. determinants of unlawful behaviour; user-generated content; social media)
Green-tick.png
Coverage of Evidence Based Policies
Issue Included within Study
Nature and Scope of exclusive rights (hyperlinking/browsing; reproduction right)
Green-tick.png
Exceptions (distinguish innovation and public policy purposes; open-ended/closed list; commercial/non-commercial distinction)
Mass digitisation/orphan works (non-use; extended collective licensing)
Licensing and Business models (collecting societies; meta data; exchanges/hubs; windowing; crossborder availability)
Fair remuneration (levies; copyright contracts)
Enforcement (quantifying infringement; criminal sanctions; intermediary liability; graduated response; litigation and court data; commercial/non-commercial distinction; education and awareness)

Datasets

Sample size: 1350
Level of aggregation: Single Charts
Period of material under study: 2007-2008