how bad is music file sharing? – part 3

Boorstin (2004) tested the causality between Internet access and CD sales over the years 1998, 2000, and 2001 using an economic model based on 99 U.S. metropolitan areas. Since Boostin could not directly measure Internet “piracy”, he broke down “(…) the population into different age groups in order to see how Internet access changes the predicted effect of each age group on CD sales.” (Boorstin 2004: 46). He then hypothesizes that “[i]f the effect of file sharing on CD sales is negative for all age groups, I expect the effect of Internet access on CD sales to be negative for all age groups” (Boorstin 2004:47). However, he also admitted that there are good reasons that the effects are not the same for different groups. It can be assumed that the substitution effect is higher for youths than for adults, whereas the sampling effect is stronger for adults than for youths. Therefore, he expected a more negative effect of Internet access on CD sales for youths than for adults.

The first “Vienna Music Business Research Days” in retrospective

At the first “Vienna Music Business Research Days” from June 9-10, 2010 at the University of Music and Performing Arts Vienna, economists and music professionals focused on music file sharing as well as on content flat rate models (“cultural” flat rate). In workshops, key notes and panel discussions recent research results were presented and controversially discussed.  

List of participants in alphabetical order: Electric Indigo (DJ & musician, Vienna), Eric Garland (CEO BigChampagne, Los Angeles), Philip Ginthör (General Manager Sony Music Entertainment Austria, Vienna), Peter Jenner (music manager and music producer, London), Stan J. Liebowitz (Professor, University of Texas at Dallas), Richard Mollet (The British Recorded Music Industry – BPI, London), Felix Oberholzer-Gee (Professor, Harvard Business School), Peter Tschmuck (Professor, University of Music and Performing Arts, Vienna), Carsten Winter (Professor, University of Music and Drama, Hannover). 

how bad is music file sharing? – part 2

In his working paper entitled “On-line Piracy and Recorded Music Sales”, David Blackburn used a dataset combining weekly album sales data from Nielsen SoundScan with data of file sharing activity on the 5 largest sharing networks in the U.S. (Kazaa, Grokster, eDonkey, iMesh, and Overnet) provided by BigChampagne over more than 60 weeks between September 2002 and November 2003. The results showed that “(…) file sharing is reducing the sales of ex ante popular artists while redistributing some of these lost sales to smaller, less well known artists” (Blackburn 2004: 41). However, “(…) the aggregate effect of file sharing on sales is quite strongly negative” (Blackburn 2004: 6). “[T]he estimates suggest that a 30% across-the-board reduction in the number of files shared would have resulted in an additional 66 million albums sold in 2003, an increase of approximately $330 million in profits” (Blackburn 2004: 6).