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Supply responses to digital distribution: Recorded music and live performances

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Author Info

  • Mortimer, Julie Holland
  • Nosko, Chris
  • Sorensen, Alan

Abstract

Technologies that enable free redistribution of digital goods (e.g., music, movies, software, books) can undermine sellers’ ability to profitably sell such goods, which raises concerns about the future development of socially valuable digital products. In this paper we explore the possibility that broad, illegitimate distribution of a digital good might have offsetting effects on the demand for complementary non-digital goods. We examine the impact of file-sharing on sales of recorded music and on the demand for live concert performances. We provide evidence suggesting that while file-sharing reduced album sales, it simultaneously increased demand for concerts. This effect is most pronounced for small artists, perhaps because file-sharing boosts awareness of such artists. The impact of file-sharing on large, well-known artists’ live performances is negligible.

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Bibliographic Info

Article provided by Elsevier in its journal Information Economics and Policy.

Volume (Year): 24 (2012)
Issue (Month): 1 ()
Pages: 3-14

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Handle: RePEc:eee:iepoli:v:24:y:2012:i:1:p:3-14

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Web page: http://www.elsevier.com/locate/inca/505549

Related research

Keywords: Media economics; Digital distribution; Piracy;

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References

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  1. Teece, David J., 1993. "Profiting from technological innovation: Implications for integration, collaboration, licensing and public policy," Research Policy, Elsevier, vol. 22(2), pages 112-113, April.
  2. Yooki Park & Suzanne Scotchmer, 2005. "Digital Rights Management and the Pricing of Digital Products," Levine's Bibliography 784828000000000402, UCLA Department of Economics.
  3. Zentner, Alejandro, 2006. "Measuring the Effect of File Sharing on Music Purchases," Journal of Law and Economics, University of Chicago Press, vol. 49(1), pages 63-90, April.
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Citations

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Cited by:
  1. Grazia Cecere & Nicoletta Corrocher & Fabio Scarica, 2012. "Why do pirates buy music online? An empirical analysis on a sample of college students," Economics Bulletin, AccessEcon, vol. 32(4), pages 2955-2968.
  2. Jin-Hyuk Kim & Tin Cheuk Leung, 2013. "Quantifying the Impacts of Digital Rights Management and E-Book Pricing on the E-Book Reader Market," Working Papers 13-03, NET Institute.
  3. Ricardo Ribeiro & João Vareda, 2007. "Crowding Out or Complementarity in the Telecommunications Market?," Working Papers 07-33, NET Institute, revised Sep 2007.
  4. Matthew Gentzkow, 2006. "Valuing New Goods in a Model with Complementarities: Online Newspapers," NBER Working Papers 12562, National Bureau of Economic Research, Inc.
  5. Joel Waldfogel, 2011. "Bye, Bye, Miss American Pie? The Supply of New Recorded Music Since Napster," NBER Working Papers 16882, National Bureau of Economic Research, Inc.
  6. Handke, Christian, 2012. "Digital copying and the supply of sound recordings," Information Economics and Policy, Elsevier, vol. 24(1), pages 15-29.
  7. Yi Qian & Eric Anderson & Duncan Simester, 2013. "Multichannel Spillovers from a Factory Store," NBER Working Papers 19176, National Bureau of Economic Research, Inc.
  8. Brett Danaher & Michael D. Smith & Rahul Telang, 2013. "Piracy and Copyright Enforcement Mechanisms," NBER Chapters, in: Innovation Policy and the Economy, Volume 14, pages 25-61 National Bureau of Economic Research, Inc.
  9. Joel Waldfogel, 2012. "Music Piracy and Its Effects on Demand, Supply, and Welfare," NBER Chapters, in: Innovation Policy and the Economy, Volume 12, pages 91-109 National Bureau of Economic Research, Inc.
  10. Anja Lambrecht & Katja Seim, 2006. "Adoption and Usage of Online Services in the Presence of Complementary Offline Services: Retail Banking," Working Papers 06-27, NET Institute, revised Oct 2006.
  11. Kim Jin-Hyuk, 2007. "Strategic Use of Copyright Protection to Deter Entry," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 7(1), pages 1-19, September.
  12. Leung, Tin Cheuk, 2012. "Music Piracy: Bad for Record Sales but Good for the iPod?," MPRA Paper 45772, University Library of Munich, Germany.
  13. Brett Danaher & Samita Dhanasobhon & Michael D. Smith & Rahul Telang, 2014. "Understanding Media Markets in the Digital Age: Economics and Methodology," NBER Chapters, in: Economics of Digitization National Bureau of Economic Research, Inc.
  14. Amedeo Piolatto & Florian Schuett, 2011. "A model of music piracy with popularity-dependent copying costs," Working Papers 2011/5, Institut d'Economia de Barcelona (IEB).
  15. Hong, Seung-Hyun, 2007. "The recent growth of the internet and changes in household-level demand for entertainment," Information Economics and Policy, Elsevier, vol. 19(3-4), pages 304-318, October.
  16. Zentner, Alejandro, 2008. "Online sales, Internet use, file sharing, and the decline of retail music specialty stores," Information Economics and Policy, Elsevier, vol. 20(3), pages 288-300, September.
  17. Felix Oberholzer-Gee & Koleman Strumpf, 2010. "File Sharing and Copyright," NBER Chapters, in: Innovation Policy and the Economy, Volume 10, pages 19-55 National Bureau of Economic Research, Inc.
  18. Joel Waldfogel, 2012. "Copyright Protection, Technological Change, and the Quality of New Products: Evidence from Recorded Music since Napster," Journal of Law and Economics, University of Chicago Press, vol. 55(4), pages 715 - 740.
  19. Joel Waldfogel, 2012. "Copyright Research in the Digital Age: Moving from Piracy to the Supply of New Products," American Economic Review, American Economic Association, vol. 102(3), pages 337-42, May.

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