Wharton Research Scholars

Determinants of the Music Piracy Divide

Valentina Assenova, WH/UPenn

Document Type Working Paper

Abstract

This research employs cross-country time series data analysis to examine physical music piracy rates across developed and developing economies since the introduction of Napster. Physical music piracy is the unauthorized copying of music on physical media, like CDs and CD-Rs. We provide 1999-2004 cross-country evidence from 70 countries that average global physical music piracy rates have grown since 1999, and observe different mean rates for OECD and non-OECD countries. We examine the effect of per capita income, legal enforcement and technology on piracy rates in the developed and developing economies and choose a fixed-effects model to explain piracy variations. We find that variations among all countries are largely due to growing internet subscriptions. For non-OECD countries, our results indicate that the increase in internet use coupled with poor copyrights enforcement has worsened physical piracy, while in OECD countries, the growth in internet subscriptions has not had a significant effect on physical piracy rates.

 

Date Posted: 21 October 2010