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Facts & Research


2024 | Piracy Impact

The Effect of Internet Piracy on CD Sales: Cross-Section Evidence | CESifo

Has piracy reduced the sale of legitimate music? Have illegal downloads become a substitute to legal CD purchases? This paper analyzes the role of music downloading on the current downturn in CD sales and assesses the potential loss from internet piracy.

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.

Key Findings

  • From the period dating 2000-2001, there is a significant effect of MP3 downloads on CD sales.
  • However, Internet piracy only accounts for less than 25% of the CD decline in 2002 in the U.S.
  • There are several factors in addition to internet piracy that could influence the variation in CD sales, including higher prices and new distribution channels.

Source: Martin Pietz, Patrick Waelbroeck, CESifo Group Munich