File-Sharing, Sampling, and Music Distribution

The use of file-sharing technologies, so-called Peer-to-Peer (P2P) networks, to copy music files has become common since the arrival of Napster. P2P networks may actually improve the matching between products and buyers - we call this the matching effect. For a label the downside of P2P networks is that consumers receive a copy which, although it is an imperfect substitute to the original, may reduce their willingness-to-pay for the original - we call this the competition effect. We show that the matching effect may dominate so that a label’s profits are higher with P2P networks than without. Furthermore, we show that the existence of P2P networks may alter the standard business model: sampling may replace costly marketing and promotion. This may allow labels to increase profits in spite of lower revenues

An Economist's Guide to Digital Music

In this guide, we discuss the impact of digitalization on the music industry. We rely on market and survey data at the international level as well as expert statements from the industry. The guide investigates recent developments in legal and technological protection of digital music and describes new business models as well as consumers' attitude towards music downloads. We conclude the guide by a discussion of the evolution of the music industry

What is the cost of low participation in French Timber auctions?

How much is the timber from public forests worth? How can the Public Forest Service define a fair market price for standing timber lots? What is the cost of low participation in French timber auctions? To estimate the value of a timber lot we adopt the transaction-evidence appraisal approach using data from timber auctions in Lorraine (Eastern France) accounting for the facts that: (i) the seller’s reserve prices are secret, (ii) there remain many unsold lots, and (iii) the number of bidders varies from one auction to another. Taking into account the endogenous participation in our hedonic price equation for the highest bid, we estimate that, compared to lots that receive two bids, the highest bid is 22% lower when there is only one bid and 37% higher when there are three or more bids.

The Effect of Internet Piracy on CD Sales: Cross-Section Evidence

piracy, music, peer-to-peer, internet, survey data, cross-country regressions

An Economist's Guide to Digital Music

In this guide, we discuss the impact of digitalization on the music industry. We rely on market and survey data at the international level as well as expert statements from the industry. The guide investigates recent developments in legal and technological protection of digital music and describes new business models as well as consumers' attitude towards music downloads. We conclude the guide by a discussion of the evolution of the music industry.Music; Internet; File-sharing; Peer-to-peer; Piracy; Digital Rights Management; Copyright; E-commerce

An Economist’s Guide to Digital Music

In this guide, we discuss the impact of digitalization on the music industry. We rely on market and survey data at the international level as well as expert statements from the industry. The guide investigates recent developments in legal and technological protection of digital music and describes new business models as well as consumers' attitude towards music downloads and audio-streaming. We conclude the guide by a discussion of the evolution of the music industry.music, internet, file-sharing, peer-to-peer, piracy, digital rights management, copyright, e-commerce

Piracy of Digital Products: A Critical Review of the Economics Literature

Digital products have the property that they can be copied almost costlessly. This makes them candidates for non-commercial copying by final consumers. Because the copy of a copy typically does not deteriorate in quality, copying products can become a wide-spread phenomenon – this can be illustrated by the surge of file-sharing networks. In this paper we provide a critical overview of the literature that addresses the economic consequences of end-user copying. We conclude that some models with network effects are well-suited for the analysis of software copying while other models incorporating the feature that copies provide information about the originals may be useful for the analysis of digital music copying.information good, piracy, copyright, internet, peer-to-peer, software, music

File-Sharing, Sampling, and Music Distribution

The use of file-sharing technologies, so-called Peer-to-Peer (P2P) networks, to copy music files has become common since the arrival of Napster. P2P networks may actually improve the matching between products and buyers - we call this the matching effect. For a label the downside of P2P networks is that consumers receive a copy which, although it is an imperfect substitute to the original, may reduce their willingness-to-pay for the original - we call this the competition effect. We show that the matching effect may dominate so that a label’s profits are higher with P2P networks than without. Furthermore, we show that the existence of P2P networks may alter the standard business model: sampling may replace costly marketing and promotion. This may allow labels to increase profits in spite of lower revenues.file-sharing; P2P; sampling; information transmission; piracy; music

Retail structure and product variety

Nous examinons l'impact de la structure horizontale et verticale d'un marché sur les incitations à l'innovation et sur la variété des produits. Nous considérons le marché d'un bien homogène où un producteur peut innover pour étendre sa gamme de produits en créant un nouveau produit substitut. Le coût de lancement du nouveau produit est fixe, et réparti entre les activités de production et de distribution. Nous montrons qu'une chaîne intégrée verticalement offre une plus grande variété de produits qu'une chaîne de monopoles. Si le coût de lancement du nouveau produit est réparti équitablement entre les deux secteurs, ou supporté essentiellement par l'amont, une concurrence imparfaite dans le secteur aval ne restaure que partiellement les incitations à innover de la structure verticale. En revanche, si ce coût est supporté principalement par le secteur aval, la concurrence en aval peut amener plus d'innovation que dans une structure verticalement intégrée.

Retail structure and product variety

We examine the impact of horizontal and vertical market structure on innovation and product variety. We consider a market for a homogeneous good where it is possible to innovate to launch a new substitute product. The cost of launching the new product is fixed and spread between the manufacturing and the retail industries. We show that a vertically intergrated firm offers a wider variety of products than a chain of monopolies. If the cost of launching a new product is equally shared among the vertical structure or mostly supported by upstream firms, retail competition partially restores the incentives to innovate of the vertical structure. Yet when the cost of launching a new product is mostly supported by the retail sector, downstream competition even leads to more innovation than vertical integration.Nous examinons l'impact de la structure horizontale et verticale d'un marché sur les incitations à l'innovation et sur la variété des produits. Nous considérons le marché d'un bien homogène où un producteur peut innover pour étendre sa gamme de produits en créant un nouveau produit substitut. Le coût de lancement du nouveau produit est fixe, et réparti entre les activités de production et de distribution. Nous montrons qu'une chaîne intégrée verticalement offre une plus grande variété de produits qu'une chaîne de monopoles. Si le coût de lancement du nouveau produit est réparti équitablement entre les deux secteurs, ou supporté essentiellement par l'amont, une concurrence imparfaite dans le secteur aval ne restaure que partiellement les incitations à innover de la structure verticale. En revanche, si ce coût est supporté principalement par le secteur aval, la concurrence en aval peut amener plus d'innovation que dans une structure verticalement intégrée