Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/93861
Authors: 
Peitz, Martin
Waelbroeck, Patrick
Year of Publication: 
2004
Series/Report no.: 
SFB/TR 15 Discussion Paper 31
Abstract: 
The use of file-sharing technologies, so-called Peer-to-Peer (P2P) networks, to copy music files has become common since the arrival of Napster. P2P networks may actually improve the matching between products and buyers - we call this the matching effect. For a label the downside of P2P networks is that consumers receive a copy which, although it is an imperfect substitute to the original, may reduce their willingness-to-pay for the original - we call this the competition effect. We show that the matching effect may dominate so that a label's profits are higher with P2P networks than without. Furthermore, we show that the existence of P2P networks may alter the standard business model: sampling may replace costly marketing and promotion. This may allow labels to increase profits in spite of lower revenues.
Subjects: 
file-sharing
P2P
sampling
information transmission
piracy
music
JEL: 
L11
L82
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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