Montoro-Pons and Cuadrado-García (2006)
|Montoro-Pons and Cuadrado-García (2006)|
|Title:||Digital goods and the effects of copying: an empirical study of the music market|
|Author(s):||Montoro-Pons, J. D., Cuadrado-García, M.|
|Citation:||Montoro-Pons, Juan D., and Manuel Cuadrado-García. "Digital goods and the effects of copying: an empirical study of the music market." 14th International Conference on Cultural Economics, Vienna. 2006.|
|Link(s):||Definitive , Open Access|
|Key Related Studies:|
|About the Data|
|Data Description:||Given the nature of our analysis we need to compile information about the phonographic industry: data on legal and illegal demand and average prices for music recordings will be used. We also need data on the illegal market costs, which we will relate to institutional as well as technological factors. Finally we will use other general data such as per capita GDP or hardware availability.|
|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:||
Digital goods, streams of information stored in bits with economic value, have transformed the way many economic agents interact in markets and specially those in the cultural sector. The non-rival nature of its consumption has had a significant impact in different industries, specially the music industry: record labels have witnessed in the last decade a proliferation of the means to circumvent copyright in protected materials. This paper aims at assessing the impact of piracy on legal demand. Unlike previous studies we address the issue from a wider perspective, considering both physical and online piracy. Our findings show that there is a substitution effect between copies and originals, and that there is no significant positive effect of piracy on legal demand, which rules out the possibility of network effects or sampling effects much discussed in the literature on piracy. Moreover we find that lost sales amount to a 131% of the legal market on the average, even though there is a wide variation between countries.
Main Results of the Study
- Both physical and online piracy substitute legal demand, hence reducing consumption of original recordings.
- The authors find no evidence, so far, of any positive impact of either file-sharing or physical piracy on demand.
- When it comes to assess the economic impact of piracy, they find that average losses amount to a 131% of the
legal market, although these are subject to a high variability.
Policy Implications as Stated By Author
Coverage of Study
|Level of aggregation:||Country|
|Period of material under study:||2003-2004|