Aguiar and Martens (2013)
|Aguiar and Martens (2013)|
|Title:||Digital Music Consumption on the Internet: Evidence from Clickstream Data|
|Author(s):||Aguiar, L., Martens, B.|
|Citation:||Aguiar, L., & Martens, B. (2013). Digital music consumption on the internet: Evidence from clickstream data. Working Paper No. JRC79605. Available at SSRN 2265299|
|Link(s):||Definitive , Open Access|
|Key Related Studies:|
|About the Data|
|Data Description:||The study’s sample contains information on 5000 individuals for each of the five largest European economies: France, Germany, Italy, Spain and the UK. The original database (Nielsen Clickstream Data) contains all the clicks of each of the 25,000 Internet users for the period going from January 1st, 2011 to December 31st, 2011. For each of these clicks, the authors observe the URL of the webpage visited and the time at which it was visited, the duration of time that the webpage is viewed and a classification of the webpage according to its content. There is a total of 15 different categories, which contain a total of 83 subcategories.|
|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:||
The goal of this paper is to analyze the behavior of digital music consumers on the Internet. Using clickstream data on a panel of more than 16,000 European consumers, we estimate the effects of illegal downloading and legal streaming on the legal purchases of digital music. Our results suggest that Internet users do not view illegal downloading as a substitute to legal digital music. Although positive and significant, our estimated elasticities are essentially zero: a 10% increase in clicks on illegal downloading websites leads to a 0.2% increase in clicks on legal purchases websites. Online music streaming services are found to have a somewhat larger (but still small) effect on the purchases of digital sound recordings, suggesting complementarities between these two modes of music consumption. According to our results, a 10% increase in clicks on legal streaming websites lead to up to a 0.7% increase in clicks on legal digital purchases websites. We find important cross country difference in these effects.
Main Results of the Study
- Illegal music downloads have little or no effect on legal digital sales; although there is trespassing of private property rights (copyrights), there is unlikely to be much harm done on digital music revenues.
- The above assertion must be interpreted in the context of a still evolving music industry. It is important to note that music consumption in physical format has until recently accounted for the lion's share of total music revenues. If piracy leads to substantial sales displacement of music in physical format, then its effect on the overall music industry revenues may well still be negative.
- The effect of online music streaming on the legal purchases of digital music suggests complementarity between streaming services and purchases of legal digital music. However this effect is different across countries: it is larger for France and the UK while it is smaller for Spain and Italy.
- Digital music revenues to record companies are growing substantially, reflecting the increasing importance of digitization in the music industry (IFPI, 2012). From that perspective, the study's findings suggest that digital music piracy should not be viewed as a growing concern for copyright holders in the digital era. In addition, those findings indicate that new music consumption channels such as online streaming positively affect copyrights owners.
Policy Implications as Stated By Author
The authors claim they cannot draw policy implications at the industry-wide level, as their analysis is only confined to the digital segment of the music industry. Nonetheless, digital music revenues to record companies are growing substantially. From that perspective, this study’s findings suggest that digital music piracy should not be viewed as a growing concern for copyright holders in the digital era. In addition, results indicate that new music consumption channels such as online streaming positively affect copyrights owners.
Coverage of Study
|Level of aggregation:||Individual|
|Period of material under study:||2011|