A model of music piracy with popularity-dependent copying costs

Florian Schuett and Amedeo Piolatto

Working Papers. Serie AD from Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie)

Abstract: Anecdotal evidence and recent empirical work suggest that musicpiracy has differential effects on artists depending on their popularity.Existing theoretical literature cannot explain such differential effectssince it is exclusively concerned with single-firm models. We present amodel with two types of artists who differ in their popularity. Weassume that the consumers' costs of illegal downloads increase withthe scarcity of a recording, and that scarcity is negatively related to theartist's popularity. Moreover, we allow for a second source of revenuesfor artists apart from CD sales. These alternative revenues depend onan artist's recognition as measured by the number of consumers whoobtain his recording either by purchasing the original or downloadinga copy. Our findings for the more popular artist generalize a resultfound by Gayer and Shy (2006) who show that piracy is beneficial tothe artist when alternative revenues are important. In our model,however, this does not carry over to the less popular artist, who isoften harmed by piracy even when alternative revenues are important.We conclude that piracy tends to reduce musical variety.

Keywords: piracy; file sharing; heterogeneous artists. (search for similar items in EconPapers)
JEL-codes: K42 L82 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2011-03
New Economics Papers: this item is included in nep-cul, nep-ipr and nep-pr~
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Published by Ivie

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http://www.ivie.es/downloads/docs/wpasad/wpasad-2011-08.pdf Fisrt version / Primera version, 2011 (application/pdf)

Related works:
Journal Article: Music piracy: A case of “The Rich Get Richer and the Poor Get Poorer” (2012)
Working Paper: A model of music piracy with popularity-dependent copying costs (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:ivi:wpasad:2011-08

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