|Title:||Ten years of file sharing and its effect on international physical and digital music sales|
|Citation:||Zentner, A. (2009). Ten Years of File Sharing and Its Effect on International Physical and Digital Music Sales. Available at SSRN 1724444.|
|Link(s):||Definitive , Open Access|
|Key Related Studies:|
|Linked by:||Zentner (2010)|
|About the Data|
|Data Description:||The study draws on three sources of secondary data: IFPI Sales data from 49 countries for the years 1997-2008, International Telecommunications data relating to cross-country Internet and Broadband penetration and Business Software Alliance data on software piracy by country.
The International Federation of Phonographic Industry(IFPI) from 49 countries for the years 1997 to 2008. The data contains two music sales variables. The first variable lists total music sales including physical sales (e.g. CDs) and digital sales (e.g. iTunes) measured at trade (wholesale) value. The second variable lists only physical sales (including sales of CDs ordered via the Internet, e.g. Amazon) measured at retail (consumer) value.
This paper combines the data on music sales with data on Internet and broadband penetration and usage by country from the International Telecommunication Union(ITU).
Finally, the study uses panel of data including information on software piracy by country from the Business Software Alliance (BSA) in order to attempt to control for idiosyncratic (country-level) changes in both police efforts and legal systems (since changes in regulations and efforts might have similar impacts on music and software piracy), a panel of data on cell phone penetration from the ITU and panels of data on GDP, inflation, population counts, and exchange rates from the World Bank and the International Monetary Fund.
|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:||
Music consumption is arguably at a historic high. File sharing technology would undoubtedly be welfare-improving provided that it did not displace music sales. Yet music purchases have decayed sharply since the introduction of file sharing a decade ago. This paper seeks to measure the effect of peer-to-peer file sharing on music sales. I use a long panel of twelve years of country-level data containing information on both physical and digital music sales and on Internet and broadband penetration. This database includes not only information going back to a period when peer-to-peer downloading did not exist, but also includes more recent information up to 2008. I employ Internet connectedness and the speed of Internet connections as proxies for unauthorized downloading, and study whether physical and total country-level music purchases have decayed more rapidly in countries experiencing faster increases in the adoption of file swapping technology. This paper uses the increase in broadband penetration replacing dial-up in order to isolate the effect of file sharing from any other possible Internet impact on music sales. My results indicate that peer-to-peer file-sharing can explain a reduction in music sales that ranges from half of the actual decrease in sales up to the entire decrease.
Main Results of the Study
The main findings of this paper are:
- Unauthorized downloading has reduced the market value of copyrighted musical works by economically large magnitudes.
- The findings indicate that unauthorized downloading can explain a substantial reduction in sales, ranging from approximately half of the actual reduction in sales up to the entire observed reduction.
- Peer-to-peer downloading has similar impacts on both total (combining physical sales and legal music downloads) and on physical music sales alone.
- The speed of the Internet connections is an important determinant in explaining the actual decay in music sales.
- The extent to which the reduction in the copyright value results in diminished artistic and cultural creations is yet to be known.
Policy Implications as Stated By Author
In concluding that unauthorised downloading is a measurable and substantial factor in the reported decrease in music sales in the digital age, a potential policy implication of the findings is: more effective enforcement of copyright law may result in an increase in music sales.
Moreover, the author states, "…the policy implications of this paper are immediately relevant for the many industries producing digital goods, including: music, books, movies, software, television, and video games."
Coverage of Study
|Level of aggregation:||International Recording Industry|
|Period of material under study:||1997-2008|