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On the impact of digital music distribution

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Author Info

  • Yoon, Kiho

Abstract

We present a framework to evaluate the impact of digital music distribution. We set up a representative model that enables the comparative static analysis. We then interpret two empirical observations about the music industry, the sales decline and the price constancy, and fit the model to these observations. We find that, while the impact of digitalization on the producers' profits is probably negative, it may not be as severe as the observed impact on the quantity. On the other hand, the impact of digitalization on the consumer surplus is unambiguously positive. The impact on the social welfare is rather ambiguous, but numerical calculations reveal that the social welfare has increased for most parameter values. We also show that enhanced copyright protection to counteract the impacts of digitalization may have an unexpected effect on the social welfare.

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File URL: http://hermes-ir.lib.hit-u.ac.jp/rs/bitstream/10086/15990/1/070iirWP07-09.pdf
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Bibliographic Info

Paper provided by Institute of Innovation Research, Hitotsubashi University in its series IIR Working Paper with number 07-09.

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Length: 20 p.
Date of creation: Sep 2007
Date of revision:
Handle: RePEc:hit:iirwps:07-09

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Related research

Keywords: Music industry; Digital music; Copyright; File sharing;

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Cited by:
  1. Ahn, Illtae & Shin, Ilsoon, 2010. "On the optimal level of protection in DRM," Information Economics and Policy, Elsevier, vol. 22(4), pages 341-353, December.

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