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Purchase, Pirate, Publicize: The Effect of Private-Network File Sharing on Album Sales

Listed author(s):
  • Jonathan Lee

    ()

    (Queen's University)

I quantify the relationship between private-network file sharing activity and album sales in the BitTorrent era using a panel of 2,109 albums' U.S. sales and file sharing downloads during 2008. Exogenous shocks to file sharing capacity address the simultaneity problem. In theory, piracy could crowd out sales by building file sharing capacity or increase them through word of mouth. I find evidence that file sharing decreases album sales for top-tier artists, but the economic impact is quite modest. However, file sharing seems to help mid-tier artists and have little effect on lower-tier artists. The results are consistent with the claim that word of mouth is stronger for lesser-known artists and that digital sales are the most vulnerable to increases in file sharing capacity.

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File URL: http://qed.econ.queensu.ca/working_papers/papers/qed_wp_1354.pdf
File Function: First version 2016
Download Restriction: no

Paper provided by Queen's University, Department of Economics in its series Working Papers with number 1354.

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Length: 43 pages
Date of creation: Sep 2016
Handle: RePEc:qed:wpaper:1354
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  1. 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.
  2. Mortimer, Julie Holland & Nosko, Chris & Sorensen, Alan, 2012. "Supply responses to digital distribution: Recorded music and live performances," Information Economics and Policy, Elsevier, vol. 24(1), pages 3-14.
  3. Ram D. Gopal & G. Lawrence Sanders, 2006. "Do Artists Benefit from Online Music Sharing?," The Journal of Business, University of Chicago Press, vol. 79(3), pages 1503-1534, May.
  4. Sylvain Dejean, 2009. "What Can We Learn from Empirical Studies About Piracy?," CESifo Economic Studies, CESifo, vol. 55(2), pages 326-352, June.
  5. Brett Danaher & Michael D. Smith & Rahul Telang & Siwen Chen, 2014. "The Effect of Graduated Response Anti-Piracy Laws on Music Sales: Evidence from an Event Study in France," Journal of Industrial Economics, Wiley Blackwell, vol. 62(3), pages 541-553, 09.
  6. Seung‐Hyun Hong, 2013. "Measuring The Effect Of Napster On Recorded Music Sales: Difference‐In‐Differences Estimates Under Compositional Changes," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 28(2), pages 297-324, 03.
  7. Marie Connolly & Alan Krueger, 2005. "Rockonomics: The Economics of Popular Music," Working Papers 878, Princeton University, Department of Economics, Industrial Relations Section..
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