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"Selling Out" and the Impact of Music Piracy on Artist Entry

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  • Joshua S. Gans

Abstract

There is a puzzle arising from empirical analyses of the impact of music piracy that this has caused declines in music revenue without a consequential decline, and perhaps even an increase, in the entry of artists and the supply of high quality music. There have been numerous explanations posited and this paper adds a novel one: that artists are time inconsistent and hence, tend to underweight fame over fortune when making future choices; i.e., the degree to which they will 'sell out.' Regardless of whether selling out is anticipated or not, the puzzle is resolved. When selling out is not anticipated, future expectations of piracy are not a concern as these impact on monetary awards that are not driving entry. When selling out is anticipated, piracy actually constrains the degree to which artists sell out, and assured of that, raises entry returns. Implications and the role of publisher contracts are also explored.

Suggested Citation

  • Joshua S. Gans, 2014. ""Selling Out" and the Impact of Music Piracy on Artist Entry," NBER Working Papers 20162, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:20162
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    References listed on IDEAS

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    1. Bae, Sang Hoo & Choi, Jay Pil, 2006. "A model of piracy," Information Economics and Policy, Elsevier, vol. 18(3), pages 303-320, September.
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    More about this item

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • K11 - Law and Economics - - Basic Areas of Law - - - Property Law
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media

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