Music Piracy and Its Effects on Demand, Supply, and Welfare

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The decade since Napster has seen a dramatic reduction in revenue to the recorded music industry, and organizations representing the recording industry have argued, first, that piracy explains this revenue reduction and, second, that the effective weakening of copyright protection for recorded music will reduce the amount of new music coming to market. Much of the research in this area has sought to document the effect of file sharing on the recording industry’ revenue, and most observers agree that technological change has sharply reduced the effective degree of protection that copyright affords since 1999. But a separate and potentially more important question is what has happened to the supply of new music in the decade since file sharing. This paper reports findings from emerging literatures on these questions. A new index of the quantity of new music derived from critics’ best-of lists suggests that the quantity of new consequential recorded music has not declined since Napster.