Recording industry revenue has fallen sharply in the last three years, and some -- but not all -- observers attribute this to file sharing. We collect new data on albums obtained via purchase and downloading, as well as the consumers' valuations of these albums, among a sample of US college students in 2003. We provide new estimates of sales displacement induced by downloading using both OLS and an instrumental variables approach using access to broadband as a source of exogenous variation in downloading. Each album download reduces purchases by about 0.2 in our sample, although possibly much more. Our valuation data allow us to measure the effects of downloading on welfare as well as expenditure in a subsample of Penn undergraduates, and we find that downloading reduces their per capita expenditure (on hit albums released 1999-2003) from $126 to $100 but raises per capita consumer welfare by $70.
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number
10874.
Length: Date of creation: Nov 2004 Date of revision: Handle: RePEc:nbr:nberwo:10874
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Herings, P. Jean-Jacques & Peeters, Ronald & Yang, Michael, 2008.
"Competition against peer-to-peer networks,"
Research Memoranda
020, Maastricht : METEOR, Maastricht Research School of Economics of Technology and Organization.
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