Digital File Sharing and Royalty Contracts in the Music Industry: A Theoretical Analysis
14 Pages Posted: 11 Jun 2008
Although several researchers have examined the impact of copying in other contexts, relatively little theoretical work exists that allows for the presence of a profit maximizing music industry as an intermediary between the creators of intellectual property and consumers. This paper develops a simple theoretical model of interactions between artists who create original musical compositions, record labels that distribute them, and consumers who have the option of copying rather than buying music. The model provides testable price and demand equations and suggests that file sharing may have been undertaken by consumers who were previously not in the market for music.
Keywords: Music Industry, Royalty Contracts, Digital File
Suggested Citation: Suggested Citation
By Richard Watt