Piracy or promotion? The impact of broadband Internet penetration on DVD sales
The Internet provides copyright holders with new sales and promotional channels for their content, while also providing consumers with new opportunities to illegally obtain free copies of this content. Unfortunately, disentangling these two effects is extremely difficult. In this paper we attempt to disentangle these two effects by applying fixed effects and first difference models to a new dataset quantifying changes in broadband Internet penetration and DVD sales at a local level from 2000 to 2003. We then compare our results to those reported in Liebowitz (2008), who uses similar models in a similar time period on a similar product category: music CDs. Unlike Liebowitz, who finds a strong negative impact of broadband penetration on music sales, our results show that increased broadband penetration leads to a significant increase in DVD sales. Using the most conservative results, 9.3% of the $14.1 billion increase in DVD sales during our study period can be attributed to increased broadband penetration. One interpretation of these results is that the difference arises from differences in the ability to pirate these two types of content: while Internet music piracy was easy and rampant from 2000 to 2003, Internet movie piracy was difficult and of generally low quality in this time period. If this interpretation is true it would suggest that, in the absence of piracy, the Internet has an overall strong positive impact on media sales.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Baltagi, Badi H. & Wu, Ping X., 1999. "Unequally Spaced Panel Data Regressions With Ar(1) Disturbances," Econometric Theory, Cambridge University Press, vol. 15(06), pages 814-823, December.
- Hui Kai-Lung & Png Ivan, 2003. "Piracy and the Legitimate Demand for Recorded Music," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 2(1), pages 1-24, September.
- Rafael Rob & Joel Waldfogel, 2004.
"Piracy on the High C's: Music Downloading, Sales Displacement, and Social Welfare in a Sample of College Students,"
NBER Working Papers
10874, National Bureau of Economic Research, Inc.
- Rob, Rafael & Waldfogel, Joel, 2006. "Piracy on the High C's: Music Downloading, Sales Displacement, and Social Welfare in a Sample of College Students," Journal of Law and Economics, University of Chicago Press, vol. 49(1), pages 29-62, April.
- Brett Danaher & Samita Dhanasobhon & Michael D. Smith & Rahul Telang, 2010. "Converting Pirates Without Cannibalizing Purchasers: The Impact of Digital Distribution on Physical Sales and Internet Piracy," Marketing Science, INFORMS, vol. 29(6), pages 1138-1151, 11-12.
- Martin Peitz & Patrick Waelbroeck, 2003. "Piracy of Digital Products: A Critical Review of the Economics Literature," CESifo Working Paper Series 1071, CESifo Group Munich.
- Zentner, Alejandro, 2006. "Measuring the Effect of File Sharing on Music Purchases," Journal of Law and Economics, University of Chicago Press, vol. 49(1), pages 63-90, April.
- Sudip Bhattacharjee & Ram D. Gopal & Kaveepan Lertwachara & James R. Marsden & Rahul Telang, 2007. "The Effect of Digital Sharing Technologies on Music Markets: A Survival Analysis of Albums on Ranking Charts," Management Science, INFORMS, vol. 53(9), pages 1359-1374, September.
- Brynjolfsson, Erik & Smith, Michael D. & Yu, (Jeffrey) Hu, 2003.
"Consumer Surplus in the Digital Economy: Estimating the Value of Increased Product Variety at Online Booksellers,"
4305-03, Massachusetts Institute of Technology (MIT), Sloan School of Management.
- Erik Brynjolfsson & Yu (Jeffrey) Hu & Michael D. Smith, 2003. "Consumer Surplus in the Digital Economy: Estimating the Value of Increased Product Variety at Online Booksellers," Management Science, INFORMS, vol. 49(11), pages 1580-1596, November.
- Julie Holland Mortimer, 2007. "Price Discrimination, Copyright Law, and Technological Innovation: Evidence from the Introduction of DVDs," The Quarterly Journal of Economics, Oxford University Press, vol. 122(3), pages 1307-1350.
When requesting a correction, please mention this item's handle: RePEc:eee:iepoli:v:22:y:2010:i:4:p:289-298. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Shamier, Wendy)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.