On the impact of digital music distribution

Kiho Yoon

No 07-09, IIR Working Paper from Institute of Innovation Research, Hitotsubashi University

Abstract: We present a framework to evaluate the impact of digital music distribution. We set up a representative model that enables the comparative static analysis. We then interpret two empirical observations about the music industry, the sales decline and the price constancy, and fit the model to these observations. We find that, while the impact of digitalization on the producers' profits is probably negative, it may not be as severe as the observed impact on the quantity. On the other hand, the impact of digitalization on the consumer surplus is unambiguously positive. The impact on the social welfare is rather ambiguous, but numerical calculations reveal that the social welfare has increased for most parameter values. We also show that enhanced copyright protection to counteract the impacts of digitalization may have an unexpected effect on the social welfare.

Keywords: Music industry; Digital music; Copyright; File sharing (search for similar items in EconPapers)
JEL-codes: K11 L86 O34 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2007-09
References: Add references at CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: On the Impact of Digital Music Distribution (2009)
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