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Piracy on the High C's: Music Downloading, Sales Displacement, and Social Welfare in a Sample of College Students
Rafael Rob University of Pennsylvania - Department of Economics Joel Waldfogel University of Pennsylvania - The Wharton School; National Bureau of Economic Research (NBER) November 2004 NBER Working Paper No. W10874 Abstract: Recording industry revenue has fallen sharply in the last three years, and some - but not all - observers attribute this to file sharing. We collect new data on albums obtained via purchase and downloading, as well as the consumers' valuations of these albums, among a sample of US college students in 2003. We provide new estimates of sales displacement induced by downloading using both OLS and an instrumental variables approach using access to broadband as a source of exogenous variation in downloading. Each album download reduces purchases by about 0.2 in our sample, although possibly much more. Our valuation data allow us to measure the effects of downloading on welfare as well as expenditure in a subsample of Penn undergraduates, and we find that downloading reduces their per capita expenditure (on hit albums released 1999-2003) from $126 to $100 but raises per capita consumer welfare by $70.
JEL Classifications: L82 Working Paper SeriesDate posted: October 29, 2004 ; Last revised: November 14, 2004Suggested CitationContact Information
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