|Title:||Music Piracy: Bad for Record Sales but Good for the iPod?|
|Author(s):||Leung, T. C.|
|Citation:||Leung, T. C. (2015). Music piracy: Bad for record sales but good for the iPod?. Information Economics and Policy, 31, 1-12.|
|Link(s):||Definitive , Open Access|
|Key Related Studies:|
|About the Data|
|Data Description:||Survey data from 884 university students, mean age 18.94, who spent an average of three to four hours a day on the internet, with 90% earning less than $200 a week. Students had an average of 2,508 songs on their computers. 28% had bought a CD, 32% had purchased a song from iTunes, and 54% had downloaded illegally within the past month.|
|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:||
Music piracy is a double-edged sword for the music industry. On the one hand, it hurts record sales. On the other hand, it increases sales of its complements. To quantify the effect of music piracy, I construct a unique survey data set and use a Bayesian method to estimate the demand for music and iPods, and find three things. First, music piracy decreases music sales by 24% to 42%. Second, music piracy contributes 12% to iPod sales. Finally, counterfactual experiments show that, if music were free, the increase in Apple's profits from iPod can more than compensate the loss of musicians.
Main Results of the Study
- music piracy decreases music sales by 24% to 42%.
- music piracy contributes 12% to iPod sales.
- counterfactual experiments show that Apple's revenue could increase by $36 per student if music were free.
Policy Implications as Stated By Author
The music industry could financially benefit from exploiting music complements to compensate for the income lost from direct music sales in a free music regime.
Coverage of Study
|Level of aggregation:||University students|
|Period of material under study:||2007-2008|