Rob and Waldfogel (2006)
|About the Data|
|Data Description:||The data for this study are derived from two surveys administered to college students at the University of Pennsylvania, Hunter College, the University of Chicago’s Master of Arts program in public policy, and City College of New York between December 2003 and February 2004.
|Data Type:||Primary data|
|Secondary Data Sources:|
|Data Collection Methods:|
|Data Analysis Methods:|
|Cross Country Study?:||No|
|Government or policy study?:||No|
|Time Period(s) of Collection:||
Recording industry revenue has fallen sharply in the last 3 years, and some—but not all—observers attribute this to file sharing. We collect new data on albums obtained via purchase and downloading, as well as consumers’ valuations of these albums, among a sample of U.S. college students in 2003. We provide new estimates of sales displacement induced by downloading, using both ordinary least squares and an instrumental variables approach with access to broadband as a source of exogenous variation in downloading. We find that each album download reduces purchases by about .2 in our sample, although possibly by much more. Our valuation data allow us to measure the effects of downloading on welfare as well as expenditure in a subsample of University of Pennsylvania undergraduates, and we find that downloading reduces their per capita expenditure (on hit albums released 1999–2003) from $126 to $101 but raises per capita consumers’ surplus by $70.
Main Results of the Study
The main results of this study are:
- Successfully measuring the possible sales-displacing effect of unpaid music downloading requires data on the quantities of purchases and downloads made by individuals.
- In the case of the individuals in the sample, downloading reduced expenditure by about 10 percent but possibly by much more.
- Downloaded music is valued much less than purchased music. Results indicate that downloaded albums tend to be low valued, which suggests that the harm done by downloading is limited.
- Downloading reduces expenditure (on hit albums, 1999–2003) by $25 per capita in the subsample.
- A direct welfare analysis of downloading suggests it raises sample consumers’ welfare associated with these albums by $70 per capita.
Policy Implications as Stated By Author
Coverage of Study
|Level of aggregation:||University students|
|Period of material under study:||2003-2004|