The Effect of File Sharing on Record Sales: An Empirical Analysis

For industries ranging from software to pharmaceuticals and entertainment,\nthere is an intense debate about the appropriate level of\nprotection for intellectual property. The Internet provides a natural\ncrucible to assess the implications of reduced protection because it\ndrastically lowers the cost of copying information. In this paper, we\nanalyze whether file sharing has reduced the legal sales of music. While\nthis question is receiving considerable attention in academia, industry,\nand Congress, we are the first to study the phenomenon employing\ndata on actual downloads of music files.We match an extensive sample\nof downloads to U.S. sales data for a large number of albums. To\nestablish causality,…

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  Baker Foundation