Piolatto and Schuett (2012)

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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

Piolatto and Schuett (2012)
Title: Music piracy: A case of “The Rich Get Richer and the Poor Get Poorer"
Author(s): Amedeo Piolatto and Florian Schuett
Year: 2012
Citation: Piolatto, Amedeo, and Florian Schuett. Music piracy: A case of “the rich get richer and the poor get poorer”. Information Economics and Policy 24.1 (2012): 30-39.
Link(s): Definitive
Key Related Studies:
Discipline:
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About the Data
Data Description: This study is a literature review and refers to previous empirical studies and economic models on the effects of file sharing on the music industry. The authors create a new economic model to compare the different effect of piracy on successful musicians and also smaller, less successful (in terms of sales) musicians. The authors go on to examine the potential positive effects of piracy on overall income. No primary or secondary data is in the study.
Data Type:
Secondary Data Sources:
Data Collection Methods:
Data Analysis Methods:
Industry(ies):
Country(ies):
Cross Country Study?: Yes
Comparative Study?: Yes
Literature review?: Yes
Government or policy study?: No
Time Period(s) of Collection:
  • No data
Funder(s):
  • Amedeo Piolatto acknowledges financial support from IVIE, the Spanish Ministry of Science and Innovation (Grant ECO2009-12680), the Barcelona GS Research Network and the Generalitat de Catalunya (Grant 2009 SGR 102).

Abstract

There is evidence that music piracy has differential effects on artists depending on their popularity. We present a model of music piracy with endogenous copying costs: consumers'costs of illegal downloads increase with the scarcity of a recording and are therefore negatively related to the number of originals sold. Allowing for a second source of revenues apart from record sales, we show that piracy can hurt some artists while benefiting others. Under plausible assumptions, piracy is beneficial to the most popular artists. However, this does not carry over to less popular artists, who are often harmed by piracy. We conclude that piracy tends to reduce musical variety.

Main Results of the Study

The impact of piracy varies depending on the artist’s popularity. Our findings generalize a result found in a different setup by Gayer and Shy (2006). Like them, we show that piracy is beneficial to popular artists when side revenues are important. However, in our model this does not necessarily carry over to less popular artists: under plausible conditions on the parameters governing quality degradation and copying costs, these artists are harmed by piracy, and this can occur even when side revenues are large enough for piracy to benefit popular artists. Therefore, we have argued that piracy may be bad for social welfare since in the long run it may reduce musical variety. To conclude, let us briefly note that this negative result is mitigated when piracy, through its effect on recognition, has a positive impact on the probability of a relatively unpopular artist to become a star, as in Alcalá and González-Maestre (2010), which is likely to be the case in the presence of imperfections in the talent revelation process (Terviö, 2009, see).

Policy Implications as Stated By Author

  • Piracy is not necessarily bad for the creators of music.
  • The most successful artists are likely to feel the least effect of piracy.
  • This means that less successful and newer artists feel more effect from piracy and this may be a barrier to joining the industry, leading to lower social welfare for consumers who will have less choice in the musicians available.


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)
Green-tick.png
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)
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