Michel (2005)

Source Details

Michel (2005)
Title:	Digital File Sharing and the Music Industry: Was There a Substitution Effect ?
Author(s):	Michel, N. J.
Year:	2005
Citation:	Michel, N. J. (2005). Digital File Sharing and the Music Industry: Was There a Substitution Effect?. Review of Economic Research on Copyright Issues, 2(2), 41-52.
Link(s):	Definitive , Open Access
Key Related Studies:	Liebowitz (2004) Hong 2004 Michel (2005)
Discipline:	K42: Illegal Behavior and the Enforcement of Law L82: Entertainment • Media O34: Intellectual Property and Intellectual Capital
Linked by:	Michel (2005)

About the Data
Data Description:	The study uses secondary, micro-level data obtained from the United States Consumer Expenditure Survey (CEX) files in which consumers respond to questions regarding their purchases and demographic characteristics in the three months prior to interview. Control measures are taken to ensure that the CSX data is representative of the U.S population. The number of consumers used to complete the survey is unknown. Rather than use a simple random sample, the CEX data is collected based on a stratified sample design whereby two sampling units exist per stratum. The author uses the CEX data to create six separate calender year samples from 1998 to 2003 to test whether consumers spent less on music and more on movie tickets and pre-recorded movies.
Data Type:	Secondary data
Secondary Data Sources:	Consumer Expenditure Survey
Data Collection Methods:	Quantitative data/text mining Archival Research
Data Analysis Methods:	Correlation and Association Regression Analysis
Industry(ies):	Sound recording and music publishing
Country(ies):	United States
Cross Country Study?:	No
Comparative Study?:	No
Literature review?:	No
Government or policy study?:	No
Time Period(s) of Collection:	2003
Funder(s):

Abstract

Several empirical studies exist that measure the impact of file- sharing services on music sales, and most suggest that there was a negative impact on sales. Still, most of these studies do not examine (at the household level) whether consumers substituted out of music and into movies. This paper uses micro-level data from the Consumer Expenditure Survey (1998 through 2003) to test for this possible substitution effect. The data does not support the hypothesis that music consumers spent less on music because they spent more on either movie tickets or prerecorded movies (purchases or rentals).

Main Results of the Study

This study provided an extrapolation of prior studies carried out by the author (2005) and Hong (2004) which found that the use of file sharing software had a negative impact on legitimate music sales. Through analysis of similar CEX survey data, the study found no evidence to support the proposition that music consumers substitute their legitimate music purchases to spend more on movie tickets and/or pre-recorded movies (purchases or rentals).

Policy Implications as Stated By Author

The study is useful to future policy makers in that it builds upon existing literature to assess the negative impact of file sharing services upon music industry sales and consumer spending.

Coverage of Study

Coverage of Fundamental Issues

Issue	Included within Study
Relationship between protection (subject matter/term/scope) and supply/economic development/growth/welfare
Relationship between creative process and protection - what motivates creators (e.g. attribution; control; remuneration; time allocation)?
Harmony of interest assumption between authors and publishers (creators and producers/investors)
Effects of protection on industry structure (e.g. oligopolies; competition; economics of superstars; business models; technology adoption)
Understanding consumption/use (e.g. determinants of unlawful behaviour; user-generated content; social media)

Coverage of Evidence Based Policies

Issue	Included within Study
Nature and Scope of exclusive rights (hyperlinking/browsing; reproduction right)
Exceptions (distinguish innovation and public policy purposes; open-ended/closed list; commercial/non-commercial distinction)
Mass digitisation/orphan works (non-use; extended collective licensing)
Licensing and Business models (collecting societies; meta data; exchanges/hubs; windowing; crossborder availability)
Fair remuneration (levies; copyright contracts)
Enforcement (quantifying infringement; criminal sanctions; intermediary liability; graduated response; litigation and court data; commercial/non-commercial distinction; education and awareness)

Datasets

Sample size:	95180
Level of aggregation:	Individual
Period of material under study:	1998 - 2003