IDEAS home Printed from https://ideas.repec.org/a/taf/jmedec/v25y2012i3p168-178.html

On File Sharing With Indirect Network Effects Between Concert Ticket Sales and Music Recordings

Author

Listed:
  • Ralf Dewenter
  • Justus Haucap
  • Tobias Wenzel

Abstract

This article analyzes the interdependency between the market for music recordings on the one side and the market for concert tickets on the other side, assuming that there are positive indirect network effects both from the record market to ticket sales for live performances and vice versa. In a model with two interrelated Hotelling lines, prices in both markets are corrected downward when compared to the standard Hotelling model. In the integrated business model, file sharing has an ambiguous effect on firms' profitability. As file sharing can indirectly increase demand for live performances, overall profits can either increase or decrease, depending on the strength of indirect network effects. Finally, file sharing may induce firms to switch from the traditional business model with two separate firms to an integrated business model where one agency markets both records and concerts (so-called 360° deals).

Suggested Citation

  • Ralf Dewenter & Justus Haucap & Tobias Wenzel, 2012. "On File Sharing With Indirect Network Effects Between Concert Ticket Sales and Music Recordings," Journal of Media Economics, Taylor & Francis Journals, vol. 25(3), pages 168-178, September.
    • Handle: RePEc:taf:jmedec:v:25:y:2012:i:3:p:168-178
    DOI: 10.1080/08997764.2012.700974
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/08997764.2012.700974
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/08997764.2012.700974?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or

    for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Mark Armstrong, 2006. "Competition in two‐sided markets," RAND Journal of Economics, RAND Corporation, vol. 37(3), pages 668-691, September.
    2. Jean‐Charles Rochet & Jean Tirole, 2006. "Two‐sided markets: a progress report," RAND Journal of Economics, RAND Corporation, vol. 37(3), pages 645-667, September.
    3. Kathleen Reavis Conner & Richard P. Rumelt, 1991. "Software Piracy: An Analysis of Protection Strategies," Management Science, INFORMS, vol. 37(2), pages 125-139, February.
    4. Geoffrey G. Parker & Marshall W. Van Alstyne, 2005. "Two-Sided Network Effects: A Theory of Information Product Design," Management Science, INFORMS, vol. 51(10), pages 1494-1504, October.
    5. 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.
    6. Felix Oberholzer-Gee & Koleman Strumpf, 2007. "The Effect of File Sharing on Record Sales: An Empirical Analysis," Journal of Political Economy, University of Chicago Press, vol. 115(1), pages 1-42.
    7. Rasch, Alexander & Wenzel, Tobias, 2013. "Piracy in a two-sided software market," Journal of Economic Behavior & Organization, Elsevier, vol. 88(C), pages 78-89.
    8. Oz Shy & Jacques‐Françlois Thisse, 1999. "A Strategic Approach to Software Protection," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 8(2), pages 163-190, June.
    9. Peitz, Martin & Waelbroeck, Patrick, 2006. "Why the music industry may gain from free downloading -- The role of sampling," International Journal of Industrial Organization, Elsevier, vol. 24(5), pages 907-913, September.
    10. Gayer, Amit & Shy, Oz, 2006. "Publishers, artists, and copyright enforcement," Information Economics and Policy, Elsevier, vol. 18(4), pages 374-384, November.
    11. Gayer, Amit & Shy, Oz, 2003. "Internet and peer-to-peer distributions in markets for digital products," Economics Letters, Elsevier, vol. 81(2), pages 197-203, November.
    12. Jean-Charles Rochet Author-Email:rochet@cict.fr Author-Workplace-Name: IDEI, University of Toulouse & Jean Tirole Author-Email: tirole@cict.fr Author-Workplace-Name: IDEI, University of Toulouse, 2006. "Two-Sided Markets: A Progress Report," RAND Journal of Economics, The RAND Corporation, vol. 37(3), pages 645-667, Autumn.
    13. Mark Armstrong Author-Email: mark.armstrong@ucl.ac.uk Author-Workplace-Name: University College of London, 2006. "Competition in Two-Sided Markets," RAND Journal of Economics, The RAND Corporation, vol. 37(3), pages 668-691, Autumn.
    14. Nicolas Curien & Francois Moreau, 2009. "The Music Industry in the Digital Era: Toward New Contracts," Journal of Media Economics, Taylor & Francis Journals, vol. 22(2), pages 102-113.
    15. Wright Julian, 2004. "One-sided Logic in Two-sided Markets," Review of Network Economics, De Gruyter, vol. 3(1), pages 1-21, March.
    16. Belleflamme, Paul & Peitz, Martin, 2010. "Platform competition and seller investment incentives," European Economic Review, Elsevier, vol. 54(8), pages 1059-1076, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. File sharing and the structure of the music market
      by Economic Logician in Economic Logic on 2011-08-22 19:14:00

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Maya Bacache-Beauvallet & Marc Bourreau & François Moreau, 2015. "Piracy and creation: the case of the music industry," European Journal of Law and Economics, Springer, vol. 39(2), pages 245-262, April.
    2. Gu, Yiquan & Wenzel, Tobias, 2012. "Transparency, entry, and productivity," Economics Letters, Elsevier, vol. 115(1), pages 7-10.
    3. Rasch, Alexander & Wenzel, Tobias, 2015. "The impact of piracy on prominent and non-prominent software developers," Telecommunications Policy, Elsevier, vol. 39(8), pages 735-744.
    4. Jose A Bermudez Trivino & Lina M Medina Hurtado & Luis Fernando Aguado Quintero, 2015. "Analyzing the decision to listen to recorded music. A microeconometric approach," Working Papers 3, Faculty of Economics and Management, Pontificia Universidad Javeriana Cali.
    5. Clémence Christin, 2013. "Entry Deterrence Through Cooperative R&D Over-Investment," Recherches économiques de Louvain, De Boeck Université, vol. 79(2), pages 5-26.
    6. Rasch, Alexander & Wenzel, Tobias, 2013. "Piracy in a two-sided software market," Journal of Economic Behavior & Organization, Elsevier, vol. 88(C), pages 78-89.
    7. Christensen, Finn, 2022. "Streaming Stimulates the Live Concert Industry: Evidence from YouTube," International Journal of Industrial Organization, Elsevier, vol. 85(C).
    8. Éric Darmon & Thomas Le Texier, 2014. "Private or Public Law Enforcement? The Case of Digital Piracy Policies with Non-monitored Illegal Behaviors," Economics Working Paper Archive (University of Rennes & University of Caen) 201403, Center for Research in Economics and Management (CREM), University of Rennes, University of Caen and CNRS.
    9. Haucap, Justus & Herr, Annika & Frank, Björn, 2011. "In vino veritas: Theory and evidence on social drinking," DICE Discussion Papers 37, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    10. Godefroy Nguyen & Sylvain Dejean & François Moreau, 2014. "On the complementarity between online and offline music consumption: the case of free streaming," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 38(4), pages 315-330, November.
    11. Gamble, Jordan Robert & Brennan, Michael & McAdam, Rodney, 2017. "A rewarding experience? Exploring how crowdfunding is affecting music industry business models," Journal of Business Research, Elsevier, vol. 70(C), pages 25-36.
    12. Bermúdez Triviño, José A. & Medina Hurtado, Lina M. & Aguado Quintero, Luis F., 2016. "La decisión de escuchar música grabada en Colombia. Un enfoque microeconométrico || The decision of listening to recorded music in Colombia. A microeconometric approach," Revista de Métodos Cuantitativos para la Economía y la Empresa = Journal of Quantitative Methods for Economics and Business Administration, Universidad Pablo de Olavide, Department of Quantitative Methods for Economics and Business Administration, vol. 21(1), pages 21-38, June.
    13. Stühmeier Torben & Wenzel Tobias, 2012. "Regulating Advertising in the Presence of Public Service Broadcasting," Review of Network Economics, De Gruyter, vol. 11(2), pages 1-23, June.
    14. 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.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Rasch, Alexander & Wenzel, Tobias, 2013. "Piracy in a two-sided software market," Journal of Economic Behavior & Organization, Elsevier, vol. 88(C), pages 78-89.
    2. Oz Shy, 2011. "A Short Survey of Network Economics," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 38(2), pages 119-149, March.
    3. Rasch, Alexander & Wenzel, Tobias, 2015. "The impact of piracy on prominent and non-prominent software developers," Telecommunications Policy, Elsevier, vol. 39(8), pages 735-744.
    4. Dewenter, Ralf & Haucap, Justus & Wenzel, Tobias, 2009. "Indirect network effects with two salop circles: the example of the music industry," FAU Discussion Papers in Economics 09/2009, Friedrich-Alexander University Erlangen-Nuremberg, Institute for Economics.
    5. Jeon, Doh-Shin & Jullien, Bruno & Klimenko, Mikhail, 2021. "Language, internet and platform competition," Journal of International Economics, Elsevier, vol. 131(C).
    6. Economides, Nicholas & Tåg, Joacim, 2012. "Network neutrality on the Internet: A two-sided market analysis," Information Economics and Policy, Elsevier, vol. 24(2), pages 91-104.
    7. Thomes, Tim Paul, 2015. "In-house publishing and competition in the video game industry," Information Economics and Policy, Elsevier, vol. 32(C), pages 46-57.
    8. Bolt, Wilko & Tieman, Alexander F., 2008. "Heavily skewed pricing in two-sided markets," International Journal of Industrial Organization, Elsevier, vol. 26(5), pages 1250-1255, September.
    9. Man Wang & Honghui Deng & Keong G. Leong, 2023. "Innovation investment and subsidy strategy in two-sided market," Information Technology and Management, Springer, vol. 24(4), pages 337-351, December.
    10. Yifan Dou & D. J. Wu, 2021. "Platform Competition Under Network Effects: Piggybacking and Optimal Subsidization," Information Systems Research, INFORMS, vol. 32(3), pages 820-835, September.
    11. Jonathan Levin, 2011. "The Economics of Internet Markets," Discussion Papers 10-018, Stanford Institute for Economic Policy Research.
    12. Godefroy Nguyen & Sylvain Dejean & François Moreau, 2014. "On the complementarity between online and offline music consumption: the case of free streaming," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 38(4), pages 315-330, November.
    13. Filistrucchi, L. & Gerardin, D. & van Damme, E.E.C. & Keunen, S. & Klein, T.J. & Michielsen, T.O. & Wileur, J., 2010. "Mergers in Two-Sided Markets - A Report to the NMa," Other publications TiSEM f901d1fe-8878-444e-a685-8, Tilburg University, School of Economics and Management.
    14. Lapo Filistrucchi & Damien Geradin & Eric van Damme, 2012. "Identifying Two-Sided Markets," Working Papers - Economics wp2012_01.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
    15. Fumiko Hayashi, 2008. "The economics of payment card fee structure: what is the optimal balance between merchant fee and payment card rewards?," Research Working Paper RWP 08-06, Federal Reserve Bank of Kansas City.
    16. Justus Haucap & Torben Stühmeier, 2016. "Competition and antitrust in Internet markets," Chapters, in: Johannes M. Bauer & Michael Latzer (ed.), Handbook on the Economics of the Internet, chapter 9, pages 183-210, Edward Elgar Publishing.
    17. Chang, Yang-Ming & Walter, Jason, 2015. "Digital piracy: Price-quality competition between legal firms and P2P network hosts," Information Economics and Policy, Elsevier, vol. 31(C), pages 22-32.
    18. Santiago Carbó-Valverde & Sujit Chakravorti & Francisco Rodríguez-Fernández, 2009. "Regulating two-sided markets: an empirical investigation," Working Paper Series WP-09-11, Federal Reserve Bank of Chicago.
    19. Oliver Budzinski & Janina Satzer, 2011. "Sports Business and Multisided Markets: Towards a New Analytical Framework? (Long Version)," Working Papers 1104, International Association of Sports Economists;North American Association of Sports Economists.
    20. Catherine Tucker & Juanjuan Zhang, 2008. "Decomposing the Congestion Effect and the Cross-Platform Effect in Two-Sided Networks: A Field Experiment," Working Papers 08-12, NET Institute, revised Oct 2008.

    More about this item

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
    • Z10 - Other Special Topics - - Cultural Economics - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:jmedec:v:25:y:2012:i:3:p:168-178. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/HMEC20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.