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Facts & Research


2024 | Piracy Impact

The Impact of Digital File Sharing on the Music Industry: An Empirical Analysis | Michel

The first file-sharing software, Napster, was shut down in 2001, but the copying technology’s impact on the music industry is still passionately debated. Music industry representatives argue that the practice decreases CD sales, while supporters of file-sharing allege the practice could actually increase sales. This study finds support for the claim that file-sharing has decreased sales.

Key Findings

  • In 2000, computer owners’ mean CD expenditure decreased $4.77, a statistically significant 10% decrease.
  • Non-computer owners’ mean CD expenditure increased $3.30 (20 %) in 1999.
  • In 2002 and 2003, years in which Napster-like services continued to grow in popularity, computer owners’ mean CD expenditures decreased by $4.79 and $5.55 (11% and 14%), respectively.
  • Computer owners’ income was $934 higher in 2003 than in 1998 (the year prior to the Napster launch), suggesting income changes may not explain the decline in these consumers’ CD purchases.

Source: Norbert J. Michel, The Berkeley Electronic Press