Oberholzer-Gee and Strumpf (2007)

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

Oberholzer-Gee and Strumpf (2007)
Title: The effect of file sharing on record sales: An empirical analysis
Author(s): Oberholzer-Gee, F., Strumpf, K.
Year: 2007
Citation: Oberholzer‐Gee, F., & Strumpf, K. (2007). The effect of file sharing on record sales: An empirical analysis. Journal of political economy, 115(1), 1-42.
Link(s): Definitive , Open Access
Key Related Studies:
Discipline:
Linked by: Ahn and Yooney (2008), Arnold, Darmon, Dejean and Penard (2014), Barker (2012c), Danaher and Smith (2013), Danaher, Smith, Telang and Chen (2012), Fukugawa (2011), Hammond (2012), Handke (2012b), Hong (2007), Leung (2009), Liebowitz (2008), Lindgren (2012), Liu (2015), Martikainen (2011), McKenzie (2009), Montoro-Pons and Cuadrado-García (2008), Oberholzer-Gee and Strumpf (2010), Oestreicher-Singer and Sundararajan (2010), Rob and Waldfogel (2007), Smith and Telang (2012), Waldfogel (2010), Waldfogel (2012) 2, Zentner (2009)
About the Data
Data Description: This study draws on a number of data sources. The primary source data is drawn from observation of downloading activity taken from OpenNap servers, which operated continuously for 17 weeks from September 8 to December 31, 2002. The study observes 1.5 million downloads and identifies 260889 successful file transfers to users in USA in the period from 10m available music files.

These data were compared with secondary sales data for Q3 & Q4 of 2002 collected from Nielsen SoundScan in order to demonstrate the effect of file-sharing networks on the sales of albums in the domestic music market of the USA. The study identifies a sample of 680 commercially relevant albums comprising 10721 individual songs.

Data Type: Primary and 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:
  • 2002
  • 1999-2006
Funder(s):
  • George F. Baker Foundation
  • Kenan Faculty Fund

Abstract

For industries ranging from software to pharmaceuticals and entertainment, there is an intense debate about the appropriate level of protection for intellectual property. The Internet provides a natural crucible to assess the implications of reduced protection because it drastically lowers the cost of copying information. In this paper, we analyze whether file sharing has reduced the legal sales of music. While this question is receiving considerable attention in academia, industry, and Congress, we are the first to study the phenomenon employing data on actual downloads of music files. We match an extensive sample of downloads to U.S. sales data for a large number of albums. To establish causality, we instrument for downloads using data on international school holidays. Downloads have an effect on sales that is statistically indistinguishable from zero. Our estimates are inconsistent with claims that file sharing is the primary reason for the decline in music sales during our study period.

Main Results of the Study

The main results of this study are:

  • File-sharing has no statistically significant impact on the sales of albums surveyed in the study.
  • The authors attribute the downturn in the recording industry to a number of other factors: the reorganisation of retail and distribution towards centralised vendors such as major supermarkets as opposed to smaller record stores, the end of the windfall brought about by the 'CD replacement cycle' that saw consumers replace vinyl collections with CDs and the cannibalisation of 'wallet share' from other entertainment sources such as DVDs, video games and mobile devices.
  • File-sharing has no significant effect on the supply of recorded music or incentives to produce music.
  • For established artists that produce commercially relevant products the effects of file-sharing are to small to affect the volume or quality of works released. For new-entrants, the probability of success is so low that the effects of file-sharing make no relevant difference to incentives.
  • The volume of works downloaded by file-sharing coupled with the statistically insignificant impact on record sales, suggests file-sharing is likely to increase aggregate welfare.

Policy Implications as Stated By Author

None stated.


Coverage of Study

Coverage of Fundamental Issues
Issue Included within Study
Relationship between protection (subject matter/term/scope) and supply/economic development/growth/welfare
Relationship between creative process and protection - what motivates creators (e.g. attribution; control; remuneration; time allocation)?
Green-tick.png
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)
Green-tick.png
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)
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)
Green-tick.png

Datasets

Sample size: 680
Level of aggregation: Focus of the study is the domestic market for recorded music in the USA.
Period of material under study: 2002


Sample size: 260889
Level of aggregation: Focus of the study is the domestic market for recorded music in the USA.
Period of material under study: 2002