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Measuring the Effect of File Sharing on Music Purchases

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  • Zentner, Alejandro
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    Abstract

    File sharing may substantially undermine the intellectual property rights of digital goods. This paper concentrates on the music industry. I estimate the effect of music downloads on the probability of purchasing music using a European individual-level cross section of 15,000 people from 2001. A simple comparison of means shows that people who regularly download music online are more likely to buy music. The positive relationship persists when controlling for observed characteristics. However, simultaneity between tastes for music and peer-to-peer usage makes it difficult to isolate the causal effect of music downloads on music purchases. To break that simultaneity, this paper uses measures of Internet sophistication and the speed of the Internet connection as instruments. The results suggest that peer-to-peer usage reduces the probability of buying music by 30 percent. On the basis of my estimates, back-of-the-envelope calculations indicate that--without downloads--sales in 2002 would have been around 7.8 percent higher.

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    Bibliographic Info

    Article provided by University of Chicago Press in its journal Journal of Law and Economics.

    Volume (Year): 49 (2006)
    Issue (Month): 1 (April)
    Pages: 63-90
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    Handle: RePEc:ucp:jlawec:y:2006:v:49:i:1:p:63-90

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    Cited by:
    1. Chia-chen Wang & Chin-ta Chen & Shu-chen Yang & Cheng-kiang Farn, 2009. "Pirate or Buy? The Moderating Effect of Idolatry," Journal of Business Ethics, Springer, vol. 90(1), pages 81-93, November.
    2. Joel Waldfogel, 2011. "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.
    3. Sumiko Asai, 2011. "Demand analysis of hit music in Japan," Journal of Cultural Economics, Springer, vol. 35(2), pages 101-117, May.
    4. Juan Montoro-Pons & Manuel Cuadrado-García, 2011. "Live and prerecorded popular music consumption," Journal of Cultural Economics, Springer, vol. 35(1), pages 19-48, February.
    5. Dongook Choi & Yeonbae Kim, 2010. "Effects of Piracy and Digital Rights Management on the Online Music Market in Korea," TEMEP Discussion Papers 201072, Seoul National University; Technology Management, Economics, and Policy Program (TEMEP), revised Dec 2010.
    6. Eric Chiang & Djeto Assane, 2007. "Determinants of music copyright violations on the university campus," Journal of Cultural Economics, Springer, vol. 31(3), pages 187-204, September.
    7. Alcalá, Francisco & González-Maestre, Miguel, 2010. "Copying, superstars, and artistic creation," Information Economics and Policy, Elsevier, vol. 22(4), pages 365-378, December.
    8. Christopher Klein & Shea Slonaker, 2010. "Chart Turnover and Sales in the Recorded Music Industry: 1990–2005," Review of Industrial Organization, Springer, vol. 36(4), pages 351-372, June.
    9. Ivan Png, 2006. "Copyright: A Plea for Empirical Research," Levine's Working Paper Archive 321307000000000484, David K. Levine.

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