Preview

Do Artists Benefit from Online Music Sharing?

Powerful Essays
Open Document
Open Document
13038 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Do Artists Benefit from Online Music Sharing?
Do Artists Benefit from Online Music Sharing? Author(s): Ram D. Gopal, Sudip Bhattacharjee, G. Lawrence Sanders Source: The Journal of Business, Vol. 79, No. 3 (May 2006), pp. 1503-1533 Published by: The University of Chicago Press Stable URL: http://www.jstor.org/stable/10.1086/500683 . Accessed: 26/06/2011 07:17
Your use of the JSTOR archive indicates your acceptance of JSTOR 's Terms and Conditions of Use, available at . http://www.jstor.org/page/info/about/policies/terms.jsp. JSTOR 's Terms and Conditions of Use provides, in part, that unless you have obtained prior permission, you may not download an entire issue of a journal or multiple copies of articles, and you may use content in the JSTOR archive only for your personal, non-commercial use. Please contact the publisher regarding any further use of this work. Publisher contact information may be obtained at . http://www.jstor.org/action/showPublisher?publisherCode=ucpress. . Each copy of any part of a JSTOR transmission must contain the same copyright notice that appears on the screen or printed page of such transmission. JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org.

The University of Chicago Press is collaborating with JSTOR to digitize, preserve and extend access to The Journal of Business.

http://www.jstor.org

Ram D. Gopal Sudip Bhattacharjee
University of Connecticut

G. Lawrence Sanders
State University of New York at Buffalo

Do Artists Benefit from Online Music Sharing?*

I.

Introduction

Several recent high profile legal cases have created a renewed focus on digitized products, intellectual property, and related copyright and pricing issues in an increasingly Internet-enabled world (Clark


References: Adler, Moshe. 1985. Stardom and talent. American Economic Review 75, no. 1:208–12. Ahlberg, E. 2000. The best way to . . . find tunes: The wide range of choices online will be music to your ears. Wall Street Journal, November 27, 2000, R22. Alexander, Peter J. 1994a. Entry barriers, release behavior, and multiproduct firms in the music recording industry. Review of Industrial Organization 9:85–98. ———. 1994b. New technology and market structure: Evidence from the music recording industry. Journal of Cultural Economics 18, no. 2:113–23. ———. 1997. Product variety and market structure: A new measure and a simple test. Journal of Economic Behavior and Organization 32:207–14. ———. 2002. Digital distribution, free riders, and market structure: The case of the music recording industry. Review of Industrial Organization 20, no. 2:151–61. Barua, Anitesh, Prabhudev Konana, Andrew B. Whinston, and Fang Yin. 2001. Driving e-business excellence. Sloan Management Review 43, no. 1:36–44. Bhattacharjee, Sudip, Ram D. Gopal, and G. Lawrence Sanders. 2003. Digital music and online sharing: Software piracy 2.0? Communications of the ACM 46, no. 7:107–11. Boston, William. 2000. Bertelsmann is betting that users, content rule with Napster deal. Wall Street Journal, November 2, 2000. Bravin, Jess. 2000. Napster ruling may be just the overture: In court, old media beats technology— for now. Wall Street Journal, July 28, 2000, B1. Burke, Andrew E. 1996. How effective are international copyright conventions in the music industry? Journal of Cultural Economics 20:51–66. Cheng, Hsing K., Ronald R. Sims, and Hildy Teegen. 1997. To purchase or to pirate software: An empirical study. Journal of Management Information Systems 13, no. 44:49–60. Chung, Kee H., and Raymond A. K. Cox. 1994. A stochastic model of superstardom: An application of the Yule Distribution. Review of Economics and Statistics 76, no. 4:771–75. Clark, Don. 1999. Recording industry group sues Napster, alleging copyright infringement on Net. Wall Street Journal, December 9, 1999, B18. ———. 2000. Steps by music industry to halt Internet piracy may be futile. Wall Street Journal Interactive Edition, September 19, 2000. Conner, Kathleen R., and Richard P. Rummelt. 1991. Software piracy: An analysis of protection strategies. Management Science 37:125–39. Crain, W. Mark, and Robert D. Tollison. 2002. Consumer choice and the popular music industry: A test of the Superstar Theory. Empirica 29, no. 1:1–9. Crombie, Lynn. 2001. Brussels inquiry into prices of CDs. CNN.COM, January 26, 2001, available at http://www.europe.cnn.com/2001/WORLD/europe/01/26/commission.cd/. Cunningham, Brendan M., Peter J. Alexander, and Nodir Adilov. 2004. Peer-to-peer file sharing communities. Information Economics and Policy 16, no. 2:197–213. Eining, Martha M., and Anne L. Christensen. 1991. A psycho-social model of software piracy: The development and test of a model. In Ethical issues in information systems use, ed. Roy DeJoie, George Fowler, and David B. Paradice, 181–89. Boston: Boyd & Fraser. Evangelista, Benny. 2000. CD soars after Net release. San Francisco Chronicle, October 12, 2000, B2. Federal Trade Commission. 2000. Record companies settle FTC charges of restraining competition in CD music market: All five major distributors agree to abandon advertising pricing policies. May 10, 2000. Available at http://www.ftc.gov/opa/2000/05/cdpres.htm. Fine, Michael. 2000. SoundScan study on napster use and loss of sales. June 10, 2000. Available at http://www.riaa.com/news/filings/pdf/napster/fine/pdf. Garber, Joseph R. 1996. Piracy. Forbes 157, no. 8:214. Givon, Moshe, Vijay Mahajan, and Eitan Muller. 1995. Software piracy: Estimation of lost sales and the impact on software diffusion. Journal of Marketing 59:29–37. Glass, Richard S., and Wallace A. Wood. 1996. Situational determinants of software piracy: An equity theory perspective. Journal of Business Ethics 15:1189–98. Gomes, Lee. 2001. Entertainment firms target Gnutella. Wall Street Journal, May 4, 2001, B6. Gomes, Lee, and Anna W. Mathews. 2001. Napster suffers a rout in appeals court: Decision casts grave doubt on operating prospects for Web music entity. Wall Street Journal, February 13, 2001, A3. Gopal, Ram D., and G. Lawrence Sanders. 1997. Preventive and deterrent controls for software piracy. Journal of Management Information Systems 13, no. 44:29–48. 1532 Journal of Business ———. 1998. International software piracy: Analysis of key issues and impacts. Information Systems Research 9, no. 4:380–97. ———. 2000. Global software piracy: You can’t get blood out of a turnip. Communications of the ACM 43, no. 9:82–89. Gopal, Ram D., G. Lawrence Sanders, Sudip Bhattacharjee, Manish Agrawal, and Suzanne Wagner. 2004. A behavioral model of digital music piracy. Journal of Organizational Computing and Electronic Commerce 14, no. 2:89–105. Hamlen, William A. Jr. 1991. Superstardom in popular music: Empirical evidence. Review of Economics and Statistics 73, no. 4:729–33. Hansen, Evan, John Borland, and Mike Yamamoto. 2000. Music may be only the beginning of grassroots piracy. CNET News.com, May 15 2000. Available at http://www.news.cnet.com/ news/0-1005-201-1757865-0.html?tagpst.ne.ni.rnbot.rn.sf. Hardie, Mark, Jr., Joseph Butt Jr., Josh Bernoff, and Alexander Aber. 1999. Virtual music rocks. Technical report. Forrester Research, Cambridge, MA. Holbrook, Morris B., and Robert M. Schindler. 1989. Some exploratory findings on the development of musical tastes. Journal of Consumer Research 16, no. 1:119–24. Hoover Institution Newsletter. 2001. Q&A with Robert J. Barro. Hoover Institution Newsletter, Winter 2001. Available at http://www.hoover.Stanford.edu/pubaffairs/newsletter/01winter/ QandA.html. Jay, E. Deborah. 2000. The impact of Napster on the purchase of music. Report on a survey by Field Research Corporation for Record Industry Association of America, June 10. Jenkins, Holman W., Jr. 2000. Business world: Let’s give it up for Metallica. Wall Street Journal, May 10 2000, A27. King, Brad 2000a. Napster: Music’s friend or foe? Wired.com News, June 14, 2000. Available at http://www.wirednews.com/news/business/0,1367,36961,00.html. ———. 2000b. Napster’s good? Bad? Er, what? Wired.com News, June 15, 2000. Available at http://www.wired.com/news/culture/0,1284,37018,00.html. MacDonald, Glenn M. 1988. The economics of rising stars. American Economic Review 78, no. 1:155–66. Mason, Janet. 1990. Crackdown on software pirates. ComputerWorld 24:107–15. Mathews, Anna W. 2000a. Can the record industry beat free Web music? Industry’s publicrelations blitz includes pop stars, speeches, appeals to “good citizenship.” Wall Street Journal, June 20, 2000, B1. ———. 2000b. Sampling free music over the Internet often leads to a sale: Poll adds to conflicting data as recording industry sorts out Web’s impact. Wall Street Journal, June 15, 2000, A3. Mathews, Anna W., and Martin Peers. 2000. Teen music buying dropped last year, according to data. Wall Street Journal, June 26, 2000, B14. McCarthy, F. T. 2000. Free music on the Internet: Napster and the damage done. Economist, July 29, 2000. Mixon, Frank G., and Rand W. Ressler. 2000. A note on elasticity and price dispersions in the music recording industry. Review of Industrial Organization 17:465–70. Nelson, Phillip. 1970. Information and consumer behavior. Journal of Political Economy 78, no. 2:311–29. Peers, Martin, and Lee Gomes. 2000. Music CD sales suffer in stores near “wired” colleges, study says. Wall Street Journal, June 13, 2000, A4. Pew (Pew Internet and American Life Project). 2000. 13 million Americans “freeload” music on the Internet; 1 billion free music files now sit on Napster users’ computers. Internet Tracking Report, June 8, 2000, 2. Pindyck, Robert S., and Daniel L. Rubinfield. 1995. Microeconomics, 4th ed. Upper Saddle River, NJ: Pearson/Prentice-Hall. Ravid, S. Abraham. 1999. Information, blockbusters, and stars: A study of the film industry. Journal of Business 72, no. 4:463–92. Rosen, Sherwin. 1981. The economics of superstars. American Economic Review 71, no. 5: 845–58. Schneider, Jerry. 1987. Users must take responsibility to control the illegal copying of software. InfoWorld 9:56. Shapiro, Carl, and Hal R.Varian. 1999. Information rules: A strategic guide to the network economy. Boston: Harvard Business School. Solomon, S. L., and James A. O’Brien. 1991. The effect of demographic factors on attitudes Online Music Sharing 1533 toward software piracy. In Ethical issues in information systems use, ed. Roy DeJoie, George Fowler, and David B. Paradice, 181–89. Boston: Boyd & Fraser. Strobl, Eric A., and Clive Tucker. 2000. The dynamics of chart success in the U.K. Pre-recorded popular music industry. Journal of Cultural Economics 24:113–34. Towse, Ruth. 1992. The earnings of singers: An economic analysis. In Cultural economics, ed. R. Towse and A. Khakee, 209–17. Heidelberg: Springer-Verlag. Welte, Jim. 2001. Record industry back on the hot seat. Business 2.0, April 3, 2001, available at http://www.business2.com/articles/web/0,1653,15670,FF.html. sharing
Continue Reading
View Writing Issues

You May Also Find These Documents Helpful

  • Satisfactory Essays

    Wk1 Dq 1
    • 729 Words
    • 3 Pages

    Wk1 Dq 1

    The current conflict between the recording industry and a portion of its customers who are involved in illicit copying of music files arose from innovations involving the compression and electronic distribution of files over the internet. Some of the ethical challenges associated with responses that threaten further innovation, ultimately reduce the chances of finding solutions that hold appeal for all parties. Today’s world of the online web has provided new opportunities for both the creators and the consumers of media such as music. The digital aspect of the web allows for wonderful innovations such as MP3 players but ethical personal use must…

    • 729 Words
    • 3 Pages
    Satisfactory Essays
    Read More
  • Powerful Essays

    Copyright Laws: Grokster V. Napster
    • 2646 Words
    • 11 Pages

    Copyright Laws: Grokster V. Napster

    CD sales were said to have dropped anywhere from 5% to 10% in 2001 and 2002. Critics of the recording industry all have something to say. Some critics claim that sales fell only slightly given the falling economy during that time period. They also claim that those who use free file sharing software are more likely to spend more on music than other music purchasers. Other critics point out statistics such as falling industry releases and higher than average CD price increases compared to other consumer prices (Laudon & Laudon, 2006). The music industry's efforts to switch illegal music downloaders to legal sites seem to be working. A recent press release by the RIAA claims that at mid-year 2005, CD releases were down 6.5%. The RIAA blames most of this decline on music piracy. The statistics in this press release lead me to believe that more of this decline may be contributable to legal online music sales and downloads. The first six months of 2005 compared to the same period in 2004 shows a 154% increase in legal digital sales of singles. According to an analysis by the NPD group, 29% of music obtained by listeners in 2004 was burned CDs. The growth of online music sales speaks for itself though. According to a June 2005 survey by Public Opinion Strategies, twice as many adults ages 18 to 54 paid to download music in 2005 than in…

    • 2646 Words
    • 11 Pages
    Powerful Essays
    Read More
  • Powerful Essays

    Accounting and Global Piracy
    • 3664 Words
    • 15 Pages

    Accounting and Global Piracy

    The purpose of this paper is to examine the importance of facing the piracy problem in the music industry and also to explore it from the accounting point of view so that the audience can get a clear understanding on how to treat ‘costs’ relating to actions in facing piracy. This paper will also identify what defines and determine an item to be an asset and an expense. Its criteria will also be thoroughly discussed. Also the…

    • 3664 Words
    • 15 Pages
    Powerful Essays
    Read More
  • Good Essays

    Theater Final
    • 2057 Words
    • 5 Pages

    Theater Final

    Liebowitz, Stan J., The Elusive Symbiosis: The Impact of Radio on the Record Industry. Review of Economic Research on Copyright Issues, Vol. 1, No. 1, pp. 93-118, 2004. Available at SSRN: http://ssrn.com/abstract=1146196…

    • 2057 Words
    • 5 Pages
    Good Essays
    Read More
  • Satisfactory Essays

    Up on Downloading
    • 312 Words
    • 2 Pages

    Up on Downloading

    Elaine McArdle said, “The music industry is struggling with a full blown crisis”. What could possibly be pushing the music industry into a crisis one might ask, illegally downloading free music. In the essay, Up on Downloading, three Harvard Law School professors are trying to come up with different solutions to this problem that is occurring. Now that our technology has become so advanced, many people are figuring out ways to cheat the system, and when people are not paying for the music they have downloaded, the artist is not getting paid. Artists are not the only one losing money but everyone involved producing the music is losing money as well. There is also less and less people going out and buying CD’s. I could probably not even remember the last time I purchased a CD. So how are the artists and producers suppose to make money when we are stealing from them? Zittrain, Nesson, and Fisher believe they could possibly have the solution to save the music industry.…

    • 312 Words
    • 2 Pages
    Satisfactory Essays
    Read More
  • Powerful Essays

    Napster Research Paper
    • 3510 Words
    • 15 Pages

    Napster Research Paper

    Sean Fanning had no idea of the amount of turmoil that the creation of Napster would cause. Full-length songs were being exchanged in a matter of minutes, and neither the artists nor the record companies were seeing a cent of it. With the widespread popularity of Internet file sharing the music population was divided. People either saw the program as a Godsend that would save them from wallet gouging CD prices or a new-aged form of robbery. From the money-hungry record company executive to the eleven year-old kid waiting forty minutes to download the latest BB Mac hit, it seems that almost everyone has a stance on Napster. The difficulty lies in appeasing all parties affected by the Internet file sharing. Though the record companies and others interested in the financial aspect of music are reluctant to adapt, they will inevitably be forced to do so by the evolution of technology.…

    • 3510 Words
    • 15 Pages
    Powerful Essays
    Read More
  • Good Essays

    Monopoly In The Music Industry
    • 181 Words
    • 1 Page

    Monopoly In The Music Industry

    The music industry is made up largely of private patronage, with the high characteristics of corporate professionals. Typically, the music industry is broken into two parts; the heroes, and the villains, the record companies are essentially seen as the villains, as many publics agree with Simon Frith’s opinion of the typical music business when it was stated “production to formulas, which limited individual creativity market choice rather than artistic judgments. Creating a culture of predictable market tastes and indulgent superstars, of slick radio shows and standardized sounds.” (REFERENCE NEEDED!)…

    • 181 Words
    • 1 Page
    Good Essays
    Read More
  • Good Essays

    The Music Industry Analysis
    • 571 Words
    • 3 Pages

    The Music Industry Analysis

    An example of when the music industry declined in record sales was during the great depression when free radio broadcast was introduced. (Taintor, “Chronology: Technology”) Last year, there was a 9% decline in album sales (e.g. CD’s) ,a 12% decline in downloads, but a whopping 54% increase in revenue for streaming services. (Hari, “Can the Music”)The music industry is a 7 billion dollar industry where streaming services has changed the way artists make a living. (Cash, “Can the Music”) A streaming service is subscription based and every time the song of an artist is listened to, the artist is paid less than half a dollar because its divided between the record company, songwriters, publishers, and performers. An example of how an artist is making money in the streaming service world is given by Hari Srinivasan when he interviews Rosanne Cash, daughter of the famous Johnny Cash, and she says that for an 18 month period she had 600,000 streams and she was paid $104. (Cash and Srinivasan, “Can the Music” ) Another example is that Aloe Blacc, a famous artist, wrote that it takes about one million songs played on Pandora, a popular streaming service, for a songwriter to earn just $90. These examples show that artists are making pennies from their songs. Because of this, artists are depending on big tours for big pay other artists of course don’t mind and just want to play the songs. (Knopper, “The New Economics”). This…

    • 571 Words
    • 3 Pages
    Good Essays
    Read More
  • Good Essays

    Ripped: How The Wired Generation Revolutionized Music
    • 1107 Words
    • 5 Pages

    Ripped: How The Wired Generation Revolutionized Music

    Music is a great place to show creativity and be yourself, right? But what happens whenever an artist pours all of his creativity into a song, and he puts it up for sale. Potential sales, in a perfect market, would be pretty high. But introduce file-sharing, and the sales are cut by about one third of the original amount. File-sharing is an activity in which one user downloads something from another user’s files. Online piracy stems from this, as one person downloads something, either legitimately or illegitimately, and then puts it up on some kind of site for others to download and use. Piracy comes into play when it is downloaded by another, and may even potentially find its way into the hands of someone who wants to claim it as their own,…

    • 1107 Words
    • 5 Pages
    Good Essays
    Read More
  • Powerful Essays

    Impact of Online Music Streaming on the Industry
    • 1977 Words
    • 8 Pages

    Impact of Online Music Streaming on the Industry

    When speaking economically, the digital music sector of the international music industry is undoubtably the most important sector in the industry. Within the last decade, music has seen cardinal changes in the way both major and independent labels distribute their products. An industry that once relied on Payola 's and mass distribution of physical records and CD 's now relies heavily on the power of the internet. The first instance of mass distribution of music through the internet was by the service Ritmoteca.com in 1998 [1]. Ritmoteca had a library of over 300,000 songs, offering individual songs for 99 cents each and albums for $9.99. After signing distribution deals with many major music labels such as Warner Bros, Sony, and Universal, it was clear that the market for selling music online was opening up. The year following Ritmoteca 's inception, the peer-to-peer file sharing service named Napster opened its virtual doors to listeners across the world at the price of nothing [2]. At its peak, Napster had over 80 million users across the globe [3]. The service 's popularity sparked a great deal of controversy, as the artists whose music was being downloaded for free felt they deserved to be compensated. Naturally, dozens of lawsuits followed, resulting in Napster 's peer-to-peer file sharing system to be shut down. However, Napster was able to make somewhat of a comeback by competing in today 's ever popular music streaming industry, which allows for users to listen to music at a monthly fee or for free, all the while compensating artists. However, artists still feel they are being compensated at too low of a rate. Clearly, there is still friction in the industry between the consumers and producers.…

    • 1977 Words
    • 8 Pages
    Powerful Essays
    Read More
  • Best Essays

    two ways a woman can get hurt
    • 1553 Words
    • 7 Pages

    two ways a woman can get hurt

    Ian, Janis. "Online Music Sharing May Benefit Artists." Internet Piracy. Ed. James D. Torr. San Diego: Greenhaven Press, 2005. At Issue. Rpt. from "The Internet Debacle—an Alternative View." www.janisian.com. Gale Opposing Viewpoints In Context. Web. 20 Mar. 2012.…

    • 1553 Words
    • 7 Pages
    Best Essays
    Read More
  • Good Essays

    Itunes Vs Itunes Research Paper
    • 659 Words
    • 3 Pages

    Itunes Vs Itunes Research Paper

    In the modern era of the internet, websites like iTunes or other MP3 software purveyors can be found. From these websites, people can look up their favorite music artists and purchase as many songs as they like, all while downloading their purchased items legally. When mainstream singers of today announce a new album on social networking sites like Twitter, many fans will most likely visit the previously mentioned website, iTunes. On iTunes, not only are songs available, but television shows, movies, and audiobooks can be accessible. Therefore, many people will prefer to purchase something off of iTunes than buy an…

    • 659 Words
    • 3 Pages
    Good Essays
    Read More
  • Satisfactory Essays

    Companies Should Be Allowed To Stop Using Popular Music In Advertising
    • 314 Words
    • 2 Pages

    Companies Should Be Allowed To Stop Using Popular Music In Advertising

    With the use of CDs becoming more irrelevant every day, and online music is more widely used through things like the Google Play store and ITunes. Musicians need a way make themselves known. Most musicians pay for their music to be in advertisements and in this way they can reap huge profits. If companies would stop using popular or unknown music they would in ones opinion kill the music industry as it would make it to hard to get a musicians name out there. (1)…

    • 314 Words
    • 2 Pages
    Satisfactory Essays
    Read More
  • Good Essays

    Music Decline
    • 540 Words
    • 3 Pages

    Music Decline

    The music industry has not only undergone evolution; but revolution. Spanning multiple generations, it has transformed from spinning black discs to downloadable versions. Not only have the product and music styles changed over time; but also many of the artists’ focus. Artists of today sing a different tune when it comes to their livelihoods. However, regardless of dwindling purchasing song sales and concert tickets, the music industry remains alive through multiple revenue streams, hi-tech modes, and target marketing. Within the industry, musicians have become more business savvy. No longer being able to rely on sales from entire albums being sold, to survive, artists have become business smart in “not so much selling music, as using music to sell.”…

    • 540 Words
    • 3 Pages
    Good Essays
    Read More
  • Satisfactory Essays

    Case Study 3 I Internet
    • 486 Words
    • 2 Pages

    Case Study 3 I Internet

    d-Economic factors: What are the trends in music expenditure over time periods? Which areas are suffering declines and which areas are enjoying increases? The power of intermediaries compared to music producers…

    • 486 Words
    • 2 Pages
    Satisfactory Essays
    Read More

Related Topics