The impact of music downloads and P2P file-sharing on the purchase of music in Canada

This study measures the extent to which free music downloads, including the use of P2P file sharing networks, act as substitutes or complements to music purchase in markets for CDs and electronic delivered music (such as MP3). The analysis uses representative micro-data from the Canadian population. We find that those who participate in free music downloading and P2P file-sharing do not purchase more or less music compared with those who do not engaged in such activities, but that, indeed, very active file-sharers purchase more music relative to file-sharers who download fewer songs. Thus, the market substitution effect between freely acquired music and purchased music is smaller than the market creation and market segmentation effect from free music downloading. In essence, the behavioural incentives underpinning free music downloading are the effects of ‘unwilling to pay’ (market substitution), ‘hear before buying’ (market creation), ‘not wanting to buy whole album’ (market segmentation), ‘not available in the CD format or on electronic pay-sites (market creation)’

The Theoretical, Conceptual and Empirical Impact of the Service Economy: A Critical Review

services, classification schedules, output measurement, productivity, knowledge and innovation, global economy