Going means trouble and staying makes it double: the value of licensing recorded music online

Abstract

This paper discusses whether a copyright compensation system (CCS) for recorded music-endowing private Internet subscribers with the right to download and use works in return for a fee-would be welfare increasing. It reports on the results of a discrete choice experiment conducted with a representative sample of the Dutch population consisting of 4986 participants. Under some conservative assumptions, we find that applied only to recorded music, a mandatory CCS could increase the welfare of rights holders and users in the Netherlands by over €600 million per year (over €35 per capita). This far exceeds current rights holder revenues from the market of recorded music of ca. €144 million per year. A monthly CCS fee of ca. €1.74 as a surcharge on Dutch Internet subscriptions would raise the same amount of revenues to rights holders as the current market for recorded music. With a voluntary CCS, the estimated welfare gains to users and rights holders are even greater for CCS fees below €20 on the user side. A voluntary CCS would also perform better in the long run, as it could retain a greater extent of market coordination. The results of our choice experiment indicate that a well-designed CCS for recorded music would simultaneously make users and rights holders better off. This result holds even if we correct for frequently observed rates of overestimation in contingent valuation studies.

More Rights, Less Income?: An Economic Analysis of the New Copyright Law in Germany

“…Third, we left out an investment opportunity of Q in period two. In reality, high fixed costs are often observed in creative industries and entry barriers may exist (Caves 2000;Handke et al 2016). Thus, Q may be forced to invest into marketing and production to assert herself in the market and to compete with P. On the one hand, this may increase the desirability of the new system because the additional investment could increase overall demand and consequently rents.…”

From pirates to subscribers: 20 years of music consumption research

“…The latter is extensively discussed in this group of contributions. Koh et al (2019) raise the need to review the licenses to download and buy digital music, in order to consolidate the digital music purchase and subscription to streaming platforms, whereas Sinha et al (2010), Handke et al (2016) or Klein and Slonaker (2010), look into the role of digital right management (DRM)…”

“…(2010), Handke et al. (2016) or Klein and Slonaker (2010), look into the role of digital right management (DRM) and the need to reduce prices, in order to transform pirates into legal consumers of digital music. A somewhat related issue is that of the unbundling of music (from albums in the physical world to songs in the digital realm) and its negative impact on revenue (Elberse, 2010).…”

Catch Me If You Can: Effectiveness and Consequences of Online Copyright Enforcement

“…They compare the welfare implications of government policies and conclude that taxing copying is superior to fining on consumers, and that a subsidy for legal producers is optimal. Evidence from a discrete choice experiment carried out in the Netherlands shows that a tax of less than two Euro on Internet subscriptions would keep revenues of music rights holders at the current level while simultaneously increasing consumer surplus (Handke et al, 2016).…”