2017 Fiscal Year Research-status Report
Do you want to steal my songs? The importance of diffusion in the music industry
| Project/Area Number |
17K13726
|
|---|
| Research Institution | Nagoya University |
|---|
Principal Investigator |
マルティン・ロドリゲス マリア 名古屋大学, 経済学研究科(国際), 特任講師 (70795012)
|
|---|
| Project Period (FY) |
2017-04-01 – 2019-03-31
|
| Keywords | Piracy / Price discrimination / Popularity |
|---|
| Outline of Annual Research Achievements |
Consider two platforms that host the songs of the artists. The open platform hosts low-quality copies and offers them for free, while the for-profit platform hosts high-quality copies and charges a positive price.
There are two artists, heterogeneous in their initial level of popularity, and each one chooses only one platform to host their tracks depending on the total profit, composed of two elements: corresponding share of the money obtained from selling the tracks, and money obtained from selling concert tickets (which depends on the amount of consumers who know the artist by any channel, either ex ante or after acquiring the tracks).
I compare the outcomes under copyright and piracy. Under piracy, the lesser-known artist does not have to sacrifice any popularity when choosing the for-profit platform, as the contents will end up being available in the open platform.
As expected, piracy usually benefits consumers and the lesser-known artist, while it damages the more famous artist. The effect on the for-profit platform is ambiguous, but it can benefit from attracting the lesser-known artist. If the equilibrium price increases because of piracy, the total welfare may decrease because of the negative effect of consumers switching from high to low-quality copies.
Results are robust to different degrees of initial popularity of the artists, and to the possibility of the for-profit platform charging different prices for the tracks of different artists.
|
| Current Status of Research Progress |
Current Status of Research Progress
2: Research has progressed on the whole more than it was originally planned.
Reason
The development of the basic model with extreme degrees of fame and the for-profit platform setting a single price went according to the schedule. However, the extension considering intermediate degrees of fame was a bit problematic, as it was not clear whether consumers are willing to pay more for the tracks of the artists they know in advance.
If this relation exists, it would be necessary to consider several corner solutions, derived from the two compact sets in which we can split consumers depending on their initial knowledge of the artist. Otherwise, it is enough to work with the weighted average and considering only the same corner solutions as in the basic model.
After deep discussions with other colleagues, I chose the latter because, in my own understanding, it reflects reality better: we all know artists that we dislike, maybe because their videos were popular on certain platforms or because you can hear their tracks at certain stores or restaurants.
(Note: these discussions took place in my department, and in two conferences that I attended even though I did not present: 16th International conference of the JEPA, and the 2nd Asia-Pacific Industrial Organisation Conference).
Once this challenge was solved, the research plan is still going according the the initial schedule.
|
| Strategy for Future Research Activity |
After presenting my work at some conferences and seminars, discussants and other participants have pointed out some considerations that deserve more thought.
First, it is very counterintuitive that the lesser-known artist receives a larger share per track sold than the famous artist. Alternative bargaining schemes will be tested to achieve a more realistic solution. This will take two months, approximately.
Second, the vertical differentiation between high and low-quality copies may not reflect the digital market nowadays. It would make sense to consider horizontal differentiation across platforms, which means that there must be a cost associated with using the open one (maybe the cost of listening annoying ads, or the necessity of having internet connection). This will take between two and three months.
Finally, it would be useful to improve the quality of the paper to present some empirical evidence before trying to submit it to an academic journal. I am still thinking of this possibility, as presenting serious evidence will probably require the participation of an econometrician. Another alternative is to present a more casual empirical evidence.
|
| Causes of Carryover |
I miscalculated the cost of the license of the software Mathematica: it was much cheaper than what I expected because Nagoya University, as an education institution, has an agreement with the company that provides the software (Wolfram).
However, this year I have to spend a larger share of the fund to present at international conferences. Two of them are already confirmed: SAET (Taiwan) and EARIE (Greece), and I may attend to another one in Germany. Since these conferences are located further than those in which I participated during the first year of the project, the unintended savings derived from the cheaper license help in covering this difference.
Also, I need either a laptop or a tablet to attend to these conferences. Although the unintended savings probably cannot cover this cost totally after paying for the higher travel expenses, they can contribute partially.
|
Research Products
(2 results)
