Buxmann, Pohl, Johnscher and Strube (2005)
|Buxmann, Pohl, Johnscher and Strube (2005)|
|Title:||Strategies for digital music markets: Pricing and the effectiveness of measures against pirate copies|
|Author(s):||Buxmann, P., Pohl, G., Johnscher, P., Strube, J.|
|Citation:||Buxmann, P., Pohl, G., Johnscher, & P., Strube, J. (2005). Strategies for digital music markets: Pricing and the effectiveness of measures against pirate copies. Wirtschaftsinformatik, 47(2), 118-125.|
|Link(s):||Definitive , Open Access|
|Key Related Studies:|
|About the Data|
|Data Description:||A explorative survey was conducted over the Internet from December 8th, 2003 until January 19th, 2004. Next to questions about the purchase of physical sound storage media and online music, the main emphases of the evaluation were the download behavior of the participants, the assessment of restrictive measures, as well as differentiated willingness to pay for digital music. In total, we received 2,260 usable questionnaires.|
|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:||
The recording industry is still facing a global decline in revenues and record sales. Paid music services have failed to deliver on their promise of a full-catalog shopping experience so far, and filesharing platforms are still widely used for obtainingonline music. In this context we conducted an empirical study via the Internet with 2.260 participants. The main results are: Neither the installation of copy protection measures nor legal actions against users of file-sharing platforms seem to be appropriate means to increase sales of CDs and online music. Potential consumers’ willingness topay is distinctly lower than the prices currently set by the available paid music services. Our study's results suggest that a price cut for music downloads would lead to increased sales, thus creating benefits for both suppliers and consumers.
Main Results of the Study
- Results suggest that neither the implementation of copy protection mechanisms nor legal actions taken against users and operators of file-sharing platforms seem to be effective means to overcome the existing crisis of the music industry.
- There is a differentiated willingness to pay for digital music; a price cut for music downloads would lead to increased sales, thus creating benefits for both suppliers and consumers. This result is supported by an experiment Real Networks conducted on their Rhapsody platform.
- A promising measure for music suppliers could consist in building up attractive online offers for the consumers.This can include recommendations for songs and bands fitting the customers’ taste as well as information about artists, concerts in the surrounding region, special offers, etc.
- Price cuts as well as an improved customer orientation seem to be more promising strategies than restrictive measures like copy protection or lawsuits.
Policy Implications as Stated By Author
According to the study's results, a price cut would probably lead to increased revenues. However, such a low price strategy is currently not applicable for online shops due to the high variable costs. A prerequisite for the implementation of such a low price strategy is cooperation between the parties involved in the digital music supply chain, i. e. musicians/composers, labels, collecting societies, distributors as well as technological and financial service providers. If these parties considered themselves a cooperation network, this network could earn more money with a low price strategy than with the policy pursued until now.
Coverage of Study
|Level of aggregation:||Individual|
|Period of material under study:||2003-2004|