Monday, 25 February 2013

Does piracy offset legal sales of recorded music?


Is the answer, based on reviewing research into this phenomenon. The findings are not however unanimous.

Oberholzer-Gee and Strumpf (2010) argue that while "some studies find evidence of a substitution effect, other findings, in particular the papers using actual file-sharing data, suggest that piracy and music sales are largely unrelated" (p.49). More recently however, in their 'non-technical' discussion of relevant literature, Smith and Telang (2012) ultimately conclude that a 'very consistent story' can be found. That is, piracy does offset otherwise legal sales of recorded music.

A negative substitution effect has been found, with Zentner (2006; 2009) demonstrating P2P usage reducing the likelihood of buying music by as much as 30-50%. More neutral effects have also been found by Oberholzer-Gee and Strumpf (2007) as well as, controversially, a positive impact of filesharing on actual purchasing (Andersen and Frenz, 2007). However, this finding has been largely revoked as Barker and Maloney (2012) recently reached the opposite, intuitive finding, when making adjustments to the same dataset.

In their accessible paper, Smith and Telang (2012)  discuss the limitations of the methodologies employed in measuring this occurence, where the absence of reliable data demands for novel approaches (with inherent flaws). These should be taken into consideration.

Many of the papers cited are accessible online, including Smith and Telang (2012), which comes recommended as a good starting point.

Go on, have a read. Make your own mind up.

Next month...

Do pirates spend more money on music?

Occasional Tweets between naps @musicpiracyblog


Andersen, B. and Frenz, M. (2007). The Impact of Music Downloads and P2P File-Sharing on the Purchase of Music: A Study for Industry Canada [online]. Available from:$FILE/IndustryCanadaPaperMay4_2007_en.pdf [Accessed Sep 12, 2011].

Barker, G. and Maloney, T. (2012). The Impact of Free Music Downloads on the Purchase of Music CDs in Canada. Working Paper Number 4-2012, Australian National University College of Law.

Oberholzer-Gee, F. and Strumpf, K. (2007). The effect of file sharing on record sales: An empirical analysis. Journal of Political Economy, 115(1), 1-42.

Oberholzer-Gee, F. and Strumpf, K. (2010). File Sharing and Copyright. National Bureau of Economic Research Series. Available from:

Smith, M.D. and Telang, R. (2012). Assessing the Academic Literature Regarding the Impact of Media Piracy on Sales. Working paper.

Zentner, A. (2006). Measuring the effect of file sharing on music purchases. Journal of Law and Economics, 49(1), 63-90.

Zentner, A. (2009). Ten Years of File Sharing and Its Effect on International Physical and Digital Music Sales. Working Paper, University of Texas at Dallas, Dallas Texas. Available from:


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