An Economist's Guide to Digital Music*
Discussion Paper No. 32 An Economist's Guide to Digital Music Martin Peitz* Patrick Waelbroeck** December 2004 *Martin Peitz, International University in Germany, D-76646 Bruchsal **Patrick Waelbroeck, ECARES, Université Libre de Bruxelles and FNRS, CP 114,50 av. Roosevelt, 1050 Bruxelles, Belgium Financial support from the Deutsche Forschungsgemeinschaft through SFB/TR 15 is gratefully acknowledged. Sonderforschungsbereich/Transregio 15 · www.gesy.uni-mannheim.de Universität Mannheim · Freie Universität Berlin · Humboldt-Universität zu Berlin · Ludwig-Maximilians-Universität München Rheinische Friedrich-Wilhelms-Universität Bonn · Zentrum für Europäische Wirtschaftsforschung Mannheim Speaker: Prof. Konrad Stahl, Ph.D. · Department of Economics · University of Mannheim · D-68131 Mannheim, Phone: +49(0621)1812786 · Fax: +49(0621)1812785 An Economist's Guide to Digital Music* Martin Peitz International University in Germany and Patrick Waelbroeck ECARES, Université Libre de Bruxelles and FNRS First draft: May 2003 This draft: December 2004 Abstract: In this guide, we discuss the impact of digitalization on the music industry. We rely on market and survey data at the international level as well as expert statements from the industry. The guide investigates recent developments in legal and technological protection of digital music and describes new business models as well as consumers' attitude towards music downloads. We conclude the guide by a discussion of the evolution of the music industry. Keywords: Music, Internet, File-sharing, Peer-to-peer, Piracy, Digital Rights Management, Copyright, E-commerce * We would like to thank Marc Bourreau for helpful comments on earlier drafts of this guide. 1 Introduction With the diffusion of fast internet connections in home computing, the music industry is facing one of its biggest challenges.
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