Title: Why the music industry may gain from free downloading: The role of sampling
Authors: Martin Peitz and Patrick Waelbroeck
Journal: International Journal of Industrial Organization, Volume 24, Issue 5 , September 2006, Pages 907-913
Abstract: Downloading digital products for free may harm creators and intermediaries because consumers may no longer buy the version for sale. However, as we show in this paper, this negative effect may be overcompensated by a positive effect due to sampling: consumers are willing to pay more because the match between product characteristics and buyers’ tastes is improved. This indeed holds under sufficient taste heterogeneity and product diversity.
Keywords: File-sharing; P2P; Sampling; Information transmission; Piracy; Music
JEL classification codes: L11; L82
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