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Purchase, Pirate, Publicize: Private-Network Music Sharing and Market Album Sales

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  • Lee, Jonathan F.

Abstract

I quantify the effects of private-network music sharing on aggregate album sales in the BitTorrent era using a panel of US sales and private-network downloads for 2,109 albums during 2008. Exogenous shocks to the network's sharing constraints address the simultaneity problem. In theory, private- network activity could crowd out sales by building aggregate file sharing ca- pacity or increase sales through word of mouth. I find evidence that private- network sharing results in decreased album sales for top{tier artists, though the economic impact is quite modest. However, private-network activity seems to help mid{tier artists. The results are consistent with claims that word of mouth is stronger for lesser-known artists and that digital sales are more vulnerable to increases in file sharing capacity. I discuss policy implica- tions and alternatives to costly legal efforts to shut down private le sharing networks.

Suggested Citation

  • Lee, Jonathan F., 2018. "Purchase, Pirate, Publicize: Private-Network Music Sharing and Market Album Sales," Queen's Economics Department Working Papers 274680, Queen's University - Department of Economics.
    • Handle: RePEc:ags:quedwp:274680
    DOI: 10.22004/ag.econ.274680
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    Cited by:

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    2. Bradley, Wendy A. & Kolev, Julian, 2023. "How does digital piracy affect innovation? Evidence from software firms," Research Policy, Elsevier, vol. 52(3).
    3. Savelkoul, Ruben, 2020. "Superstars vs the long tail: How does music piracy affect digital song sales for different segments of the industry?," Information Economics and Policy, Elsevier, vol. 50(C).
    4. Milan Miric & Lars Bo Jeppesen, 2020. "Does piracy lead to product abandonment or stimulate new product development?: Evidence from mobile platform‐based developer firms," Strategic Management Journal, Wiley Blackwell, vol. 41(12), pages 2155-2184, December.
    5. Alagöz, Nazli, 2024. "Promotion and technological change in the music industry," Other publications TiSEM 511ceba0-62a0-4c60-a76c-f, Tilburg University, School of Economics and Management.
    6. Carmine Guerriero, 2023. "Property rights, transaction costs, and the limits of the market," Economics of Governance, Springer, vol. 24(2), pages 143-176, June.
    7. 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.

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    Keywords

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    JEL classification:

    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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