Why the Oberholzer-Gee/Strumpf Article on File Sharing Is Not Credible
Econ Journal Watch, 13(3) September 2016, pp 373-396
24 Pages Posted: 19 Dec 2016 Last revised: 20 Dec 2016
Date Written: September 1, 2016
This article examines the data, results, and methods underlying an influential 2007 article on music piracy published in the Journal of Political Economy. The authors of that article had access to music download data from actual pirate servers — data that has never been made public — providing much of the article’s novelty and lending it an aura of authenticity. They also relied upon an esoteric instrument, the number of German kids on school vacations, which they claimed had a strong positive effect on American piracy. My reexamination identifies several important concerns and problems. First, the measured aggregate download data contain extremely large weekly variations that are inconsistent with other comparable data. Then, the first-stage instrumented regression results imply, counter-factually, that American piracy should disappear on days when German children are in school. Further, the reported average value of the German school variable erroneously indicates that German students spend more time on holiday than at school, indicating a serious problem in the construction of that variable. In addition, the aggregate relationship between measured American downloads and German school vacations is the opposite of the hypothesized relationship underlying the use of the instrument. Most importantly, a careful investigation of the German kids on school holiday reveals any possible impact on the number of pirate files made available to Americans to be far too small to have had a causal impact on American piracy. Finally, the number of German kids on school holidays is revealed to not be independent of American record sales, invalidating their use as an instrument.
Keywords: Piracy, File Sharing, Oberholzer-Gee, Strumpf, Sound Recordings, Music, iTunes, Napster
JEL Classification: Z1, O3, L8
Suggested Citation: Suggested Citation