Bye, Bye, Miss American Pie? The Supply of New Recorded Music Since Napster

Joel Waldfogel

NBER Working Paper No. 16882
Issued in March 2011
NBER Program(s):   IO   LE

In the decade since Napster, file-sharing has undermined the protection that copyright affords recorded music, reducing recorded music sales. What matters for consumers, however, is not sellers’ revenue but the surplus they derive from new music. The legal monopoly created by copyright is justified by its encouragement of the creation of new works, but there is little evidence on this relationship. The file-sharing era can be viewed as a large-scale experiment allowing us to check whether events since Napster have stemmed the flow of new works. We assemble a novel dataset on the number of high quality works released annually, since 1960, derived from retrospective critical assessments of music such best-of-the-decade lists. This allows a comparison of the quantity of new albums since Napster to 1) its pre-Napster level, 2) pre-Napster trends, and 3) a possible control, the volume of new songs since the iTunes Music Store’s revitalization of the single. We find no evidence that changes since Napster have affected the quantity of new recorded music or artists coming to market. We reconcile stable quantities in the face of decreased demand with reduced costs of bringing works to market and a growing role of independent labels.

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Acknowledgments

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