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Illegal Music Downloading And Its Impact On Legitimate Sales: Australian Empirical Evidence

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  • JORDI McKENZIE

Abstract

This paper explores illegal music file-sharing activity and its effect on Australian sales of singles in the physical and digital retail markets. Using fifteen weeks of Australian Recording Industry Association weekly chart rankings of physical and digital sales, combined with a proxy for download activity derived from the popular peer-to-peer (P2P) network Limewire, the evidence suggests no discernible impact of download activity on legitimate sales. Whilst significant negative correlation between chart rank and download activity is observed in the digital market, once download endogeneity is purged from the model and song heterogeneity is controlled for no significant relationship remains. Copyright 2009 The Author. Journal compilation 2009 Blackwell Publishing Ltd/University of Adelaide and Flinders University.

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  • JORDI McKENZIE, 2009. "Illegal Music Downloading And Its Impact On Legitimate Sales: Australian Empirical Evidence," Australian Economic Papers, Wiley Blackwell, vol. 48(4), pages 296-307, December.
  • Handle: RePEc:bla:ausecp:v:48:y:2009:i:4:p:296-307
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    References listed on IDEAS

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    1. David Giles, 2007. "Increasing returns to information in the US popular music industry," Applied Economics Letters, Taylor & Francis Journals, vol. 14(5), pages 327-331.
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    4. Lonnie Stevans & David Sessions, 2005. "An Empirical Investigation Into the Effect of Music Downloading on the Consumer Expenditure of Recorded Music: A Time Series Approach," Journal of Consumer Policy, Springer, vol. 28(3), pages 311-324, September.
    5. De Vany, Arthur & Walls, W David, 1996. "Bose-Einstein Dynamics and Adaptive Contracting in the Motion Picture Industry," Economic Journal, Royal Economic Society, vol. 106(439), pages 1493-1514, November.
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    7. Jordi Mckenzie, 2008. "Bayesian Information Transmission and Stable Distributions: Motion Picture Revenues at the Australian Box Office," The Economic Record, The Economic Society of Australia, vol. 84(266), pages 338-353, September.
    8. Rosen, Sherwin, 1981. "The Economics of Superstars," American Economic Review, American Economic Association, vol. 71(5), pages 845-858, December.
    9. Chris Hand, 2001. "Increasing returns to information: further evidence from the UK film market," Applied Economics Letters, Taylor & Francis Journals, vol. 8(6), pages 419-421.
    10. W. David Walls, 1997. "Increasing returns to information: evidence from the Hong Kong movie market," Applied Economics Letters, Taylor & Francis Journals, vol. 4(5), pages 287-290.
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    Cited by:

    1. Romeu, Andrés & Martinez-Sanchez, Francisco, 2015. "Technological Development and Software Piracy," UMUFAE Economics Working Papers 43702, DIGITUM. Universidad de Murcia.
    2. Emmi Martikainen, 2014. "Does file-sharing reduce DVD sales?," Netnomics, Springer, vol. 15(1), pages 9-31, July.
    3. Joëlle Farchy & Mathilde Gansemer & Jessica Petrou, 2013. "E-book and book publishing," Chapters,in: Handbook on the Digital Creative Economy, chapter 31, pages 353-364 Edward Elgar Publishing.

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