Michel (2006)
Contents
Source Details
| Michel (2006) | |
| Title: | The Impact of Digital File Sharing on the Music Industry: An Empirical Analysis |
| Author(s): | Michel, N. J. |
| Year: | 2006 |
| Citation: | Michel, N. J. (2006). The impact of digital file sharing on the music industry: An empirical analysis. Topics in Economic Analysis & Policy, 6(1). |
| Link(s): | Open Access |
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| About the Data | |
| Data Description: | The CEX is used by the BLS to compute the Consumer Price Index and data is collected in both interview and diary formats. The diary method (consumers keep a log) primarily collects detailed information on consumer staples, such as food. We use the CEX interview files, where up to 95 percent of total household expenditures are reported, for the years 1995 through 2003.For example, the first set of interviews in the 2003 CEX interview survey is conducted in January 2003 and captures expenditures from October to December of 2002. The second set of interviews is conducted in February 2003 and captures expenditures from November 2002 to January 2003, and so on. The last set of interviews (the fifteenth quarter) is conducted in March 2004 and captures expenditures from December 2003 to February 2004. |
| Data Type: | Primary data |
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| Cross Country Study?: | No |
| Comparative Study?: | No |
| Literature review?: | No |
| Government or policy study?: | No |
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Abstract
The first file-sharing software, Napster, was shut down in 2001, but the copying technology’s impact on the music industry is still passionately debated. This paper uses micro-level data from the Consumer Expenditure Survey to examine the impact of Internet file sharing on music sales. Music industry representatives argue that the practice decreases CD sales, while supporters of file-sharing allege the practice could actually increase sales. Using household-level data from the Consumer Expenditure Survey, we find support for the claim that file-sharing has decreased sales.
Main Results of the Study
Our micro-level data test results suggest that file sharing may have reduced album sales (between 1999 and 2003) by as much as 13 percent for some music consumers. At minimum, our test results indicate that the relationship between computer ownership and music purchases (in the CEX) weakened after Internet file sharing became a viable option for music purchasers. No similar negative change exists in the data prior to the initiation of the first file-sharing service. Furthermore, we present evidence that this weakened relationship is concentrated among the heaviest music purchasers, and we find no evidence that file sharing led to a widespread increase in music purchases. Nonetheless, our results should be used carefully when predicting the long-term viability of the music industry in an environment where record labels (or artists) compete directly with free file-sharing services. In the current market, most music consumers purchase their music in the CD format, and digital downloads are not as highly substitutable for CDs as for other digital downloads.
Policy Implications as Stated By Author
Coverage of Study
Datasets
| Sample size: | 3753 |
| Level of aggregation: | Consumer Unit |
| Period of material under study: | 2003 |
