Economists Examine File Sharing and Music Sales

Abstract

The decline in sales of music CDs and the recording industry’s attempts to reverse the decline have been much in the news over the last few years. Since this decline began at the same time that file-sharing became popular, and since file-sharing would be expected to lead to a decline in sales, file-sharing is the leading candidate among possible causes of this decline. At the center of the file-sharing debate is the empirical issue of whether or not file-sharing decreases sales. In this paper I examine the different empirical methodologies that have been chosen by economists studying this issue. The studies use different methodologies but nevertheless find, almost unanimously, that file- sharing has led to a serious decline in record sales, except for one highly publicized study that reaches very different, and in my opinion, highly implausible conclusions.