The Effect of Internet Piracy on Cd Sales: Cross-Section Evidence

Abstract

We analyze the role of music downloading on the current downturn in CD sales. We provide 2000-2001 cross-country evidence in support of the claim of losses due to internet piracy made by the music industry. For the U.S. we also assess the potential loss from internet piracy using detailed survey data. We conclude the empirical analysis by forecasting CD sales for 2002. The results suggest that internet piracy played a significant role in the decline in CD sales in 2001, but can hardly account for the subsequent drop in 2002.