Handbook on the Economics of Copyright
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Handbook on the Economics of Copyright

A Guide for Students and Teachers

Edited by Richard Watt

Featuring expert contributors from around the world, this book offers insight into the vital theoretical and practical aspects of the economics of copyright. Topics discussed include fair use, performers’ rights, copyright and trade, online music streaming, internet piracy, copyright and visual art markets, and open source publishing. In addition to in-depth coverage of these timely topics, the authors also offer insightful predictions and policy recommendations for the future.
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Chapter 13: The impacts of internet piracy

Stan J. Liebowitz


Fifteen years ago the term ‘file-sharing’ was unknown. Then Napster arrived in the second half of 1999 and grew to be an international sensation during 2000. The sound recording industry in the US and throughout the world experienced a dramatic swoon in sales beginning in 2000, continuing unabated through 2010. The industry has blamed this sales decline on the growth of file-sharing. Although Napster was effectively shut down as an unauthorized file-sharing service within two years of its birth, its progeny live on, as do new habits of downloading developed by Internet users. Although it is clear that pirated versions of products often substitute for the purchase of an original, and this effect is unambiguously harmful to the industry, there are other, more subtle effects possibly at work, as well. One factor that has received a good deal of attention is the ‘sampling’ effect. For example, piracy could allow a consumer to discover new songs that then induce the consumer to go purchase the entire album containing those songs that might otherwise have not been purchased. This effect, first proposed in Liebowitz (1985), makes the theory of piracy somewhat ambiguous.

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