Peitz and Waelbroeck (2004)
|Peitz and Waelbroeck (2004)|
|Title:||The effect of internet piracy on CD sales: Cross-section evidence|
|Author(s):||Peitz, M., Waelbroeck, P.|
|Citation:||Peitz, M., & Waelbroeck, P. (2004). The effect of internet piracy on CD sales: Cross-section evidence. Review of Economic Research on Copyright Issues,1(2), 71-79.|
|Link(s):||Definitive , Open Access|
|Key Related Studies:|
|Linked by:||Andersen and Frenz (2008), Buxmann, Pohl, Johnscher and Strube (2005), Handke (2012a), Huygen, Helberger, Poort, Rutten and Van Eijk (2009), Leung (2009), Liebowitz (2006b), Martikainen (2011), Smith and Telang (2012), Thomes (2013), Van Eijk, Poort and Rutten (2010), Zentner (2005)|
|About the Data|
|Data Description:||The study used a combination of secondary data sources, representing 16 countries with the largest markets for pre-recorded music (in value), accounting for more than 90% of the world market value, for the period 1998-2002.|
|Data Type:||Secondary data|
|Secondary Data Sources:|
|Data Collection Methods:|
|Data Analysis Methods:|
|Cross Country Study?:||Yes|
|Government or policy study?:||No|
|Time Period(s) of Collection:||
We use a 1998-2002 cross-section dataset to analyse the claim of losses due to internet piracy made by the record industry. The results suggest that internet piracy played a significant role in the decline in music sales during the early days of file-sharing networks.
Main Results of the Study
The study confirms the RIAA’s claim that MP3 music downloads were causing a substantial decrease in music sales. It finds that:
- Music downloading could have caused a 20% reduction in music sales worldwide between 1998 and 2002: a significant negative effect at the 10% confidence level.
- Broadband penetration is significant: it always has a negative impact on music sales, although other factors are also relevant.
- The increased availability of digital media players also negatively influences music sales.
- The study also shows that factors other than music downloads on file-sharing networks were likely to have been responsible for the decline in music sales in 2003.
Policy Implications as Stated By Author
Although the study’s stated 20% reduction in worldwide music sales is said to be only a crude estimate, the authors believe that it is a good reference value that other studies, especially microeconometric ones, could use to assess the exact substitution that has taken place between CDs and MP3s.
Coverage of Study
|Level of aggregation:||P2P users|
|Period of material under study:||2002-2003|