Measuring the Effect of File Sharing on Music Purchases
File sharing may substantially undermine the intellectual property rights of digital goods. This paper concentrates on the music industry. I estimate the effect of music downloads on the probability of purchasing music using a European individual-level cross section of 15,000 people from 2001. A simple comparison of means shows that people who regularly download music online are more likely to buy music. The positive relationship persists when controlling for observed characteristics. However, simultaneity between tastes for music and peer-to-peer usage makes it difficult to isolate the causal effect of music downloads on music purchases. To break that simultaneity, this paper uses measures of Internet sophistication and the speed of the Internet connection as instruments. The results suggest that peer-to-peer usage reduces the probability of buying music by 30 percent. On the basis of my estimates, back-of-the-envelope calculations indicate that--without downloads--sales in 2002 would have been around 7.8 percent higher.
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.
When requesting a correction, please mention this item's handle: RePEc:ucp:jlawec:y:2006:v:49:i:1:p:63-90. 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: (Journals Division)
If references are entirely missing, you can add them using this form.