Cambridge PhD Economics researcher Rufus Pollock has published an excellent summary of all the recent quantitative studies on the impact of file-sharing on music sales — the range of conclusions is pretty amazing.
In particular, the point estimates imply that the median 'new' artist, whose weekly sales are 2,163 albums, would see a decrease in weekly sales of 101 albums per week were files shared to be reduced by 10%. A similar calculation can be made for an artist of maximum popularity. At the median level of sales for these artist, the estimate implies an increase in sales of 490 albums per week if file sharing were to be reduced by 10%. This stark contrast between the magnitudes of the effects for artists of varying levels of popularity highlights the importance of this heterogeneity in estimating the aggregate effects of file sharing.
A similar calculation can be made for estimating the total effect of file sharing on sales. To estimate the aggregate effect of a 30% reduction in file sharing across the board,33 I simply subtract out the effect of the deleted files from the second stage estimation in Table 4 and then aggregate up to market level numbers using the appropriate weights. The estimated effect of such an across-the- board reduction in file sharing is to increase aggregate sales by 15%. Again, while these calculations were useful for placing the analysis inside the framework of the previous literature, they do not take into account competition effects across albums, and so the effects of file sharing will be overstated in these estimates.
David Blackburn
