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Effects of Piracy and Digital Rights Management on the Online Music Market in Korea

Author

Listed:
  • Dongook Choi

    () (ESSEC Business School, France)

  • Yeonbae Kim

    () (Technology Management, Economics, and Policy Program (TEMEP), Seoul National University)

Abstract

This study attempted to identify the relationship among user demand for online music, unauthorized file-sharing activities (piracy), and the effect of digital rights management (DRM) in Korea. Empirical analysis showed that piracy and DRM have negative effects on the demand for online music. In addition, DRM augmented piracy during the study period, resulting in a negative overall effect on demand.

Suggested Citation

  • Dongook Choi & Yeonbae Kim, 2010. "Effects of Piracy and Digital Rights Management on the Online Music Market in Korea," TEMEP Discussion Papers 201072, Seoul National University; Technology Management, Economics, and Policy Program (TEMEP), revised Dec 2010.
  • Handle: RePEc:snv:dp2009:201072
    as

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    File URL: ftp://147.46.237.98/DP-72.pdf
    File Function: First version, 2010
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    References listed on IDEAS

    as
    1. Bae, Sang Hoo & Choi, Jay Pil, 2006. "A model of piracy," Information Economics and Policy, Elsevier, vol. 18(3), pages 303-320, September.
    2. Rob, Rafael & Waldfogel, Joel, 2006. "Piracy on the High C's: Music Downloading, Sales Displacement, and Social Welfare in a Sample of College Students," Journal of Law and Economics, University of Chicago Press, vol. 49(1), pages 29-62, April.
    3. Zentner, Alejandro, 2006. "Measuring the Effect of File Sharing on Music Purchases," Journal of Law and Economics, University of Chicago Press, vol. 49(1), pages 63-90, April.
    4. Martin Peitz & Patrick Waelbroeck, 2005. "An Economist's Guide to Digital Music," CESifo Economic Studies, CESifo, vol. 51(2-3), pages 359-428.
    5. Peitz, Martin & Waelbroeck, Patrick, 2006. "Piracy of digital products: A critical review of the theoretical literature," Information Economics and Policy, Elsevier, vol. 18(4), pages 449-476, November.
    6. Iimi, Atsushi, 2005. "Estimating demand for cellular phone services in Japan," Telecommunications Policy, Elsevier, vol. 29(1), pages 3-23, February.
    7. Domon, Koji & Yamazaki, Naoto, 2004. "Unauthorized file-sharing and the pricing of digital content," Economics Letters, Elsevier, vol. 85(2), pages 179-184, November.
    8. 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, pages 1-42.
    9. Steven T. Berry, 1994. "Estimating Discrete-Choice Models of Product Differentiation," RAND Journal of Economics, The RAND Corporation, vol. 25(2), pages 242-262, Summer.
    10. Train,Kenneth E., 2009. "Discrete Choice Methods with Simulation," Cambridge Books, Cambridge University Press, number 9780521747387.
    11. Cunningham, Brendan M. & Alexander, Peter J. & Adilov, Nodir, 2004. "Peer-to-peer file sharing communities," Information Economics and Policy, Elsevier, vol. 16(2), pages 197-213, June.
    12. 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.
    13. Stan J. Liebowitz, 2005. "Economists Examine File-Sharing and Music Sales," Industrial Organization 0505001, EconWPA.
    14. Kaiser, Ulrich, 2001. "The effects of website provision on the demand for German women's magazines," ZEW Discussion Papers 01-69, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Online music; digital music; digital rights management; file sharing; piracy.;

    JEL classification:

    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software

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