On File Sharing with Indirect Network Effects between Concert Ticket Sales and Music Recordings

15 Pages Posted: 4 Mar 2012

See all articles by Justus Haucap

Justus Haucap

Heinrich Heine University Dusseldorf - Department of Economics; German Institute for Economic Research (DIW Berlin)

Ralf Dewenter

University of the Federal Armed Forces Hamburg - Department of Economics

Tobias Wenzel

Heinrich Heine University Dusseldorf - Duesseldorf Institute for Competition Economics (DICE)

Date Written: March 3, 2012

Abstract

This paper analyses the interdependency between the market for music recordings on the one side and the market for concert tickets on the other side, assuming that there are positive indirect network effects both from the record market to ticket sales for live performances and vice versa. In a model with two interrelated Hotelling lines prices in both markets are corrected downwards when compared to the standard Hotelling model. In the integrated business model file sharing has an ambiguous effect on firms' profitability. As file sharing can indirectly increase demand for live performances, overall profits can either increase or decrease, depending on the strength of indirect network effects. Finally, file sharing may induce firms to switch from the traditional business model with two separate firms to an integrated business model where one agency markets both records and concerts (so-called 360 degree deals).

Keywords: Music Industry, Indirect Network Eff ects, File Sharing, Piracy, Record Sales, Concert Tickets, 360 degree deals

JEL Classification: L13, L82, Z10

Suggested Citation

Haucap, Justus and Dewenter, Ralf and Wenzel, Tobias, On File Sharing with Indirect Network Effects between Concert Ticket Sales and Music Recordings (March 3, 2012). Available at SSRN: https://ssrn.com/abstract=2015212 or http://dx.doi.org/10.2139/ssrn.2015212

Justus Haucap (Contact Author)

Heinrich Heine University Dusseldorf - Department of Economics ( email )

Duesseldorf
Germany

HOME PAGE: http://www.dice.uni-duesseldorf.de

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstra├če 58
Berlin, 10117
Germany

Ralf Dewenter

University of the Federal Armed Forces Hamburg - Department of Economics ( email )

Holstenhofweg 85
Hamburg, 22043
Germany

Tobias Wenzel

Heinrich Heine University Dusseldorf - Duesseldorf Institute for Competition Economics (DICE) ( email )

Universitaetsstr. 1
Duesseldorf, NRW 40225
Germany

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
297
Abstract Views
1,798
rank
115,729
PlumX Metrics