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Consider album A and a more costly to download album B, αqA>αqB, which both have
the same popularity distribution, αVA=αVB≡αV. From (A3),
(A8) Downloads(A) – Downloads(B)
= ∫q>0(g(q,αqB)-g(q,αqA))F(q/γ,αV)dq
= -γ-1∫q>0(G(q,αqB)-G(q,αqA))f(q/γ,αV)dq < 0
where the second equality is from integration by parts and the inequality again follows
from first order stochastic dominance. After separately integrating the downloading and
non-downloading populations, the change in purchases equation is,
(A9) Purchases(A) – Purchases(B) | Downloads have feedback
= ∫V>p(G(γV,αqA)-G(γV,αqB))(f(V,φ(αV))-f(V,αV))dV
In the absence of feedback effects, φ(αV)=αV, purchases are identical for the two albums
It's been a while since I've posted anything about filesharing - yes
that hot topic that continues to pit the recording and music industry
against all the teenie boppers with their fast internet connections and
large hard drives, and the technologists on the other - claiming the
dangers of DRM mechanisms and limiting creatviity.
So while I was catching up with the topic I came upon this paper by Koleman Strumpf @ UNC Chapel Hill.
The paper concludes that file sharing has limited effect on music sales
- if anything it gives consumers the ability to "try before buy" and
enhances sales. They also identify file sharing as a cheap and
effective alternative to traditional advertising and see it as a cash
cow if used properly.
If you really feel like reading the 52 page paper, feel free to download it here:
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