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Does file sharing reduce music CD sales?: A case of Japan

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  • Tanaka, Tatsuo
  • 田中, 辰雄

Abstract

File sharing systems such as Napster and KaZaA are accused by the recording industry of causing declines in sales of music CDs, and recently users of these systems are under lawsuit attack. However, there is not sufficient evidence that file sharing systems are responsible for the recent decline in music CD sales. Two previous studies examined micro data of sales and downloads and found mixed results regarding the connection between file sharing and CD sales (Blackburn, 2004; Oberholzer and Strumpf, 2004). The current essay estimated the effect of file sharing systems on music CD sales using micro data from Japan in 2004. Japan's file sharing system ("Winny") is almost completely decentralized and highly anonymous compared with ones addressed in the two previous studies, thus Japanese users can download music files with less concern about lawsuits. The goal of this research is to examine the effect of file sharing on music CD sales in such an illegal-copy-friendly file sharing system. Based on micro data of CD sales and numbers of downloads, we found that there was very little evidence that file sharing reduces music CD sales in Japan. We controlled simultaneous bias between sales and downloads by instrumental variables, but did not find correlation between CD sales and numbers of downloads. Although there were large differences in the numbers of downloads among CD titles, these differences did not affect CD sales. We also carried out a user survey on file sharing and CD purchases with consideration to the potential bias of respondents trying to understate their illegal copying activity. This survey also showed that file sharing had very limited influence on CD purchases.

Suggested Citation

  • Tanaka, Tatsuo & 田中, 辰雄, 2004. "Does file sharing reduce music CD sales?: A case of Japan," IIR Working Paper 05-08, Institute of Innovation Research, Hitotsubashi University.
    • Handle: RePEc:hit:iirwps:05-08
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    File URL: https://hermes-ir.lib.hit-u.ac.jp/hermes/ir/re/15965/070iirWP05-08.pdf
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    Citations

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    Cited by:

    1. Krawczyk, Michał & Tyrowicz, Joanna & Kukla-Gryz, Anna & Hardy, Wojciech, 2015. "“Piracy is not theft!” Is it just students who think so?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 54(C), pages 32-39.
    2. Wojciech Hardy & Michal Krawczyk & Joanna Tyrowicz, 2015. "Friends or foes? A meta-analysis of the link between "online piracy" and sales of cultural goods," Working Papers 2015-23, Faculty of Economic Sciences, University of Warsaw.
    3. Birgitte Andersen & Marion Frenz, 2010. "Don’t blame the P2P file-sharers: the impact of free music downloads on the purchase of music CDs in Canada," Journal of Evolutionary Economics, Springer, vol. 20(5), pages 715-740, October.
    4. 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.
    5. Fukugawa Nobuya, 2018. "Are Heavy Pirates also Heavy Buyers?: A Case of the Video Game Industry in Japan," Asian Journal of Law and Economics, De Gruyter, vol. 9(1), pages 1-13, April.
    6. Stan J. Liebowitz, 2017. "Responding to Oberholzer-Gee and Strumpf's Attempted Defense of Their Piracy Paper," Econ Journal Watch, Econ Journal Watch, vol. 14(2), pages 174–195-1, May.
    7. Stefano Comino & Fabio Maria Manenti, 2015. "Intellectual Property and Innovation in Information and Communication Technology (ICT)," JRC Research Reports JRC97541, Joint Research Centre.
    8. Tyrowicz, Joanna & Krawczyk, Michal & Hardy, Wojciech, 2020. "Friends or foes? A meta-analysis of the relationship between “online piracy” and the sales of cultural goods," Information Economics and Policy, Elsevier, vol. 53(C).
    9. Shinichi Yamaguchi & Hirohide Sakaguchi & Kotaro Iyanaga & Hidetaka Oshima & Tatsuo Tanaka, 2023. "The impact of licensed and unlicensed free goods: an empirical analysis of music, video, and book industries in Japan," SN Business & Economics, Springer, vol. 3(3), pages 1-22, March.
    10. Tatsuo Tanaka, 2019. "The Effects of Internet Book Piracy: Case of Comics," Keio-IES Discussion Paper Series 2019-016, Institute for Economics Studies, Keio University.

    More about this item

    Keywords

    Copyright; File sharing; P-to-P; Intellectual Property Rights; Music; Entertainment Industry;
    All these keywords.

    JEL classification:

    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media

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