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File Sharing andCopyrightOBERHOLZER-GEE, F.; STRUMPF, KC A P. 2 , P. 1 9 - 5 5 . I N : L E R N E R , J . ; S T E R N , S . P. I N :I N N O VAT I O N P O L I C Y A N D T H E E C O N O M Y. [ S . L . ] : N A T I O N A LB U R E A U O F E C O N O M I C R E S E A R C H U N I V E R S I T Y O FC H I C A G O , V. 1 0 , 2 0 1 0Apresentação: Gustavo Viegas Rodrigues
File sharing technology xindustry sales declineEmpiric research shows that the effect could beup to 20%The matter of the artist motivationFrom 2000 to 2009 music production more thandoubled, films rose by 30% and books by 66% (2002-7)File sharing as an stimulus to sell more concerttickets
File sharing and Copyright“How much weaker the incentives to createnew works would be in a regime with moreconstrained copyright?”“How producers would respond to weakerincentives. Would they offer fewer works orperhaps works of lesser quality?”
Does file sharing harm sales?Average iPod -> 3,500 songs*64% of those songs -> never played!!!Business Software Alliance -> 1 filedownloaded = 1 file not sold. Really?What about complementing productsMp3 music and iPods* (Lamere, 2006)
A little History…In the 20s, the music industry tried to block radioset producers…… and now they pay “jabá”Also the entertainment industry reacted to thecreation of the VCR…… but they probably didn´t complain against the DVDplayer or Blu-Ray player because they learnt to makemoney out of home-movies.Now, there are ambiguous views about file sharing:65% didn’t buy an album because they had downloadedit;But 80% said they’d bought an album because they’dsampled it beforehand!
Key Events on File SharingThe lawsuit disputesBased on Sony Betamaxdecision, P2P services hada chanceSupreme Court ended upoverruling the lowerinstance decisionRIAA decides to stopsuing in 2008! The ideawas to act on thebackstage with ISPsAnd then, BitTorrentcame up
Data on File SharingFile Sharing on Internet2*Apr, 2010* http://netflow.internet2.edu/
Consumer BehaviorSample of ~10k songsIn a sample of ~10ksongs:60% were neverdownloaded in 17 weeks81% were downloadedless than 5 xGlobal nature of filesharingUnless industry supportsthe music launch,downloads won’t pick up
Does file sharing reduce thesale of copyright materials?Theoretical modeling states that file sharing caneither hurt or help producersMajority of empirical studies indicate that sharingis harmfulRates range from 3.5% in movies (Rob and Waldfogel,2007) to 30% in music (Zentner, 2006).A typical estimate is 20% of displacementEven the papers that show some loss, it is usual to findsubsamples not affectedChallenges on the empirical literatureChoice of sampleMeasures of piracyUnobserved heterogeneityAlternative – Instrumental variable techniques
How important arecomplementary source of income?Concerts and merchandisinghave become an importantsource of income8.5 CDs to produce $20 ofconcert revenue (pre-Napster)vs. 6.4 CDs in 99-02Concert prices rose above CPI
Not considering only CD sales,the industry is in better shape(07 vs. 97)CD only = - 15%CD + Concerts = + 5%CD + Concerts + iPods = 66%Does file sharing undermineartistic production?chance of successful launch is< 1/100Musicians get $1 or $2 peralbum soldOver ¾ of musicians have anon-music related jobAlbum launches rising – othermedia tooDoes file sharing reduce thesale of copyright materials?
ConclusionsCopyright exists to encourage innovationLooking only to CD sales is too narrow – whatabout the total income?Empiric research is confusePapers using actual file sharing data suggest thatpiracy and music sales are largely unrelatedThe distribution of impacts of related salesoffsetting CD sales decrease is stillunderstudied
The Effect of DigitalSharing Technologieson MusicBHATTACHARJEE,S., GOPAL, R.D.,LERTWACHARA, K., MARSDEN, J.R.,TELANG, R.Apresentação: Gustavo Viegas Rodrigues
IntroductionIs Music sharing harmful or helpful to themusic business?Decline could be a result of both increasingcompetition for consumer attention and downturn inmacroeconomic conditionsProblems of data collection on empirical work
The studyStudy: top 100 songs on Billboard chart vs. songs’ downloadson WinMx –Before mid’98 and after mid’00,Data collection pre and post that window (95 – 04)3 time segmentsVariablesDebut rankArtist reputationRecord labelArtist descriptorsStudy objectivesAssess impact of market technological developments on music salesEvaluate impact of P2P sharing on album’s survival on the chart
“Does the level of sharing ofsharing influence survival timeon the charts?”
Related LiteratureNature of music as an experience goodSampling and experiencing prior to purchase canleverage salesNumber of albums released every year andodds of successRelated to search costs of new artistsLearning process reinforce the trend to like popularartistsLarger recording labels – larger support“Bandwagon effect” – the more on top, the better
ModellingOrdinary Least Squares (OLS) regressionOne equation for album survivalAnother for impact of sharing on survivalAuthors decided to twitch the formula due to strongcorrelation of sharing with unmeasurable dataUse of instruments to consider RIAA decision in Jun’03
Data34 weeksEach album wastracked until itsdrop-off the listStart date of measurement:SurvivalDebut rankDebut post-TSAlbums releasedSuperstarMinor LabelSoloa MaleSolo FemaleGroupHoliday_month Debut
Data set 114 to 10weeks49 to 40
Data set 2Analysis is focused on sharing levels of eachalbum during its debut weekTwo alternative measures of sharing:Share_debutShare_max
Album SurvivalResults – without interactionEach unit changein rank on debutadds 1.98% lesschance of survival35% morechance ofsurvival23% lesschance ofsurvivalvs. major
Album survivalResults – with interactionsThe effect onsurvival gets moredramatic as thedebut rank grows.
Analysis of sharing on survivalResults without instrumentIt would seem that Shares_max leads to longersurvival
Analysis of sharing on survivalResults with instrumentWhen measure Feb-May vs. July-Oct survivaltimes, there was no significant differenceThe RIAA announcement proved to be a highlyinfluential variant, confirming the results of 80%less sharing after it came upDebut rank again came significantSharing didn’t come significant (althoughnegative)
Analysis of sharing on survivalResults with instrument + 2additional regressionsCoefficients on the regression instruments (RIAAannouncement indicator & RIAA announcementindicator x debut ranks) are highly significantAgain top albums are not negatively affected bysharingThe effect of sharing is more negative fornumerically higher ranked albums
Impact of sharing on survivalHigher survival for higher debut ranksHigh = 5.12Mid = 3.12Low = 1.12Mean survival timeHigh debut rank (>20) = from 2.92 to 4.7 weeks (!!!!!!)Low debut rank (<=20) = from 13.11 to 13.65 weeks
Conclusions – 1/2Debut rank impacts survivalSurvival time drops 42% after controlling othervariables (although the above prevails)Superstar’s albums survive 35% more on theTop100Female artists survive longerAlbums promoted by major labels survive longer
Conclusions – 2/2There was a significant decrease on sharing afterthe RIAA announcementThe estimated effect of sharing is worse for lesspopular albums (lower on charts)The research only considers tracking an albumwhen it reached the Top100. Sharing prior to thatcould have an effect not considered