Supply Responses to Digital Distribution: Recorded Music and Live Performances

Julie H. Mortimer, Alan T. Sorensen, Chris Nosko
2010 Social Science Research Network  
Technologies for reproducing and redistributing digital goods have made it more difficult to earn profits from their sale, leading to concerns that socially valuable digital products with non-convex production technologies may not be brought to market. However, digital goods are often jointly supplied with non-digital products, and changes in distribution technologies affect not only the market for the digital product, but also the pricing and profitability of the non-digital good. We outline a
more » ... good. We outline a simple model illustrating these effects in the music industry, and test the model's implications using detailed data on weekly CD sales and individual concert performances for nearly 2,000 musical artists over a ten-year period. We show that while sales of recorded music declined after the introduction of file-sharing, concert revenues and the number of artists performing concerts increased dramatically. We examine whether these changes
doi:10.2139/ssrn.1703041 fatcat:v23qf37s2ret7cofkipaea4v74