Smith and Telang (2010)
|Smith and Telang (2010)|
|Title:||Piracy or promotion? The impact of broadband Internet penetration on DVD sales|
|Author(s):||Smith, M. D., Telang, R.|
|Citation:||Smith, M. D., & Telang, R. (2010). Piracy or promotion? The impact of broadband Internet penetration on DVD sales. Information Economics and Policy, 22(4), 289-298.|
|Link(s):||Definitive , Open Access|
|Key Related Studies:|
|About the Data|
|Data Description:||DVD sales, Broadband penetration, Broadband use for media consumption, demographic characteristics and market characteristics for 99 largest media markets in the United States from 2000 to 2003|
|Data Type:||Secondary 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 Internet provides copyright holders with new sales and promotional channels for their content, while also providing consumers with new opportunities to illegally obtain free copies of this content. Unfortunately, disentangling these two effects is extremely difficult. In this paper we attempt to disentangle these two effects by applying fixed effects and first difference models to a new dataset quantifying changes in broadband Internet penetration and DVD sales at a local level from 2000 to 2003. We then compare our results to those reported in Liebowitz (2008), who uses similar models in a similar time period on a similar product category: music CDs. Unlike Liebowitz, who finds a strong negative impact of broadband penetration on music sales, our results show that increased broadband penetration leads to a significant increase in DVD sales. Using the most conservative results, 9.3% of the $14.1 billion increase in DVD sales during our study period can be attributed to increased broadband penetration. One interpretation of these results is that the difference arises from differences in the ability to pirate these two types of content: while Internet music piracy was easy and rampant from 2000 to 2003, Internet movie piracy was difficult and of generally low quality in this time period. If this interpretation is true it would suggest that, in the absence of piracy, the Internet has an overall strong positive impact on media sales.
Main Results of the Study
- Distangling the effects of internet broadband penetration on piracy and promotion by applying fixed effects and first difference*Net impact of increased broadband internet penetration on DVD sales during a period when it was difficult to pirate movies relative to the net impact on CD sales reported by Liebowitz (2008)*Difference between internet music piracy and movie piracy *Broadband internet penetration may improve consumers' ability to discover and evaluate media products and may increase media firms' ability to target their promotions to the right consumers.
Policy Implications as Stated By Author
From a policy perspective our results may shed light on the degree to which governments should regulate new internet technologies to protect established industries, relative to more focussed efforts to reduce piracy on these networks.
Coverage of Study
|Level of aggregation:||DMA|
|Period of material under study:||2000 -2003|