Abstract
The downloading of music from the internet has been proliferating over the past three years. The recording industry believes that this phenomenon is responsible for the decline in recorded music sales since the year 2000, and to a certain extent this is supported by consumer surveys and previous studies that have used panel or cross-sectional data. In this analysis, an econometric, time-series model of consumer spending on tapes, LPs, and CDs is estimated which takes into account factors that are posited as effecting the consumption of recorded music, but not used in previous studies. The most significant finding is that music downloading, subsequent to 2000, affects consumer spending on tapes, LPs, and CDs through the price elasticity of demand. Falling DVD prices have also served to reduce the demand of recorded music during this same period.
Article PDF
Similar content being viewed by others
Avoid common mistakes on your manuscript.
References
C. Granger P. Newbold (1974) ArticleTitleSpurious regressions in econometrics Journal of Econometrics 2 111–120 Occurrence Handle10.1016/0304-4076(74)90034-7
R. Halvorsen P. Palmquist (1980) ArticleTitleThe interpretation of dummy variables in semilogarithmic equations American Economic Review 70 474–475
Hui, K.-L., & Png, I. P. L. (2003). Piracy and the legitimate demand for recorded music. Contributions to Economic Analysis and Policy, 2(1), Article 11, http://www.bepress.com/bejeap/contributions/vol2/iss1/art11
S. Johansen (1988) ArticleTitleStatistical analysis of cointegration vectors Journal of Economic Dynamics and Control 12 231–254 Occurrence Handle10.1016/0165-1889(88)90041-3
P. Kennedy (1981) ArticleTitleEstimation with correctly interpreted dummy variables in semilogarithmic equations American Economic Review 71 801
Liebowitz, S. (2003). Will MP3 downloads annihilate the record industry? The evidence so far In: G. Libecap (Ed.), Advances in the study of entrepreneurship, innovation, and economic growth, vol. 15, Intellectual property and entrepreneurship, Ch. 7. Greenwich, CT: JAI Press.
J. G. MacKinnon A. A. Haug L. Michelis (1999) ArticleTitleNumerical distribution functions of likelihood ratio tests for cointegration Journal of Applied Econometrics 14 563–577 Occurrence Handle10.1002/(SICI)1099-1255(199909/10)14:5<563::AID-JAE530>3.3.CO;2-I
M. Peitz P. Waelbroeck (2003) The effect of Internet piracy on CD sales: Cross- section evidence CESifo. Munich
P. Perron (1989) ArticleTitleThe great crash, the oil price shock, and the unit root hypothesis Econometrica 57 1361–1401
P. Phillips B. Hansen (1990) ArticleTitleStatistical inference in instrumental variables regression with I(1) processes Review of Economic Studies 57 99–125
P. Saikkonen H. Lutkepohl (2000a) ArticleTitleTesting for the cointegrating rank of a VAR process with structural shifts Journal of Business and Economic Statistics 18 451–464 Occurrence HandleMR1802047
P. Saikkonen H. Lutkepohl (2000b) ArticleTitleTrend adjustment prior to testing for the cointegrating rank of a VAR process Journal of Time Series Analysis 21 435–456 Occurrence Handle10.1111/1467-9892.00192
J. Stock M. Watson (1988) ArticleTitleTesting for common trends Journal of the American Statistical Association 83 1097–1107
L. K. Vanston (2002) Residential broadband forecasts Technology Futures Inc Austin, TX
Willcox, J. K. (2003). Where have all the CDs gone? Sound and Vision, June, pp. 87–89
A. Zentner (2003) Measuring the effect of online music piracy on music sales University of Chicago, Department of Economics. Chicago
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
About this article
Cite this article
Stevans, L.K., Sessions, D.N. An Empirical Investigation Into the Effect of Music Downloading on the Consumer Expenditure of Recorded Music: A Time Series Approach. J Consum Policy 28, 311–324 (2005). https://doi.org/10.1007/s10603-005-8645-y
Issue Date:
DOI: https://doi.org/10.1007/s10603-005-8645-y