Felix Oberholzer-Gee and Koleman Strumpf recently responded to some of my negative assessments of... more Felix Oberholzer-Gee and Koleman Strumpf recently responded to some of my negative assessments of their influential 2007 piracy article. In this article I analyze their responses to my assessments. Several of their responses have the appearance of being plausible if they are read without reference to my actual arguments and discussion. A careful reading of my assessments and Professors Oberholzer-Gee and Strumpf’s responses, however, reveals that Professors Oberholzer-Gee and Strumpf generally misrepresent or ignore my arguments, while making numerous but untested factual assertions that are clearly refuted by the data, when tested. My negative assessments are only further enhanced by the weakness of their response, as well as by a new finding indicating that they mismatched by a week their download data and school vacation data, which would necessarily corrupt their key results.
... Finally, let us look at when foreclosure rates reached unprecedented levels that might ... un... more ... Finally, let us look at when foreclosure rates reached unprecedented levels that might ... un-precedentedness': foreclosure rates as high as the previous historical high; foreclosure rates 50 ... Table 1 Dates that Crisis Foreclosure Rates Exceeded Previous Extreme Values (Post 998 ...
Advances in the Study of Entrepreneurship, Innovation & Economic Growth, 2004
This JXlPfr jm...tigat<J Ih~'mpact of pUMo_pur """",,-0 ,/wt promol' th, UNJu,hQri"d do~"loadmg o... more This JXlPfr jm...tigat<J Ih~'mpact of pUMo_pur """",,-0 ,/wt promol' th, UNJu,hQri"d do~"loadmg of MP1 fil'. ""u' on th, "COm/aM indu",>'.
The transmission of digitized music files, particularly on filesharing networks, is having a prof... more The transmission of digitized music files, particularly on filesharing networks, is having a profound impact on the consumption and production of music. Although previous forms of copying have been found to often have benign effects on copyright owners, the rise in file -sharing has coincided with a steep decline in the sale of sound recordings. This paper attempts to empirically examine whether file -sharing has caused the decline in record sales. It examines the size and pattern of file -sharing and its theoretical impact on record sales. Using a data set for 99 American cities containing infor mation on Internet use, record sales, and other demographic variables, an econometric analys is is undertaken to explain the change in record sales before and after filesharing. The results imply that file -sharing has caused the entire decline in record sales that has occurred and also appears to have vitiated what otherwise would have been fairly robust growth in the industry. Looking at sales in individual musical genres reinforces the primary conclusions. The record industry's risky strategy of assiduous ly fighting filesharing, therefore, appears to have a rational basis.
... Stan Liebowitz School of Management University of Texas at Dallas July 2008 Abstract: Through... more ... Stan Liebowitz School of Management University of Texas at Dallas July 2008 Abstract: Through a stroke of luck, a referee report in the review process at the JPE has been positively identified as the Oberholzer-Gee/Strumpf (O/S) response to my earlier comment. ...
The file-sharing literature has focused mainly on whether file-sharing has decreased record sales... more The file-sharing literature has focused mainly on whether file-sharing has decreased record sales, with less attention paid to the size of any decline. Although there is still some contention, most studies have concluded that filesharing has decreased record sales. What has not been noted is that most estimates indicate that the file-sharing has caused the entire enormous decline in record sales that has occurred over the last decade. This heretofore hidden result is due to the lack of a consistent metric that would allow easy comparability across studies. The task of this paper is to provide such a metric, translate the results reported in the literature into that metric, and then summarizes the results from this exercise.
Although previous forms of copying have been found to often have benign effects on copyright owne... more Although previous forms of copying have been found to often have benign effects on copyright owners the rise in file-sharing has coincided with a steep decline in the sale of sound recordings. This paper attempts to empirically examine the extent, if any, to which file-sharing has caused the decline in record sales. Using a data set for 99 American cities containing information on Internet use, record sales, television viewing, radio listening, and other demographic variables, an econometric analysis is undertaken to examine the relationship between record sales and file-sharing, as proxied by Internet use, from 1998 to 2003. First, we find that the Internet itself reduces time spent on other entertainment activities, but only by a small amount. We then subtract this generic Internet impact from the overall Internet impact and conclude that the decline associated with that component of Internet use that we can attribute to file-sharing indicates that file-sharing has caused the entire decline in record sales and appears to have vitiated what otherwise would have been growth in the industry. Looking at sales in individual musical genres reinforces the primary conclusion since those genres that seem most likely to fall prey to file-sharing have the strongest measured negative impact from Internet usage.
What role does the past play in current economic conditions? Economic models usually determine eq... more What role does the past play in current economic conditions? Economic models usually determine equilibrium ending points without concern for intermediate disequilibrium conditions or the prior history of the system. That the past does play some role is obvious, but the nature of its impact requires careful delineation. Some path dependence theorists have argued that past decisions might have locked-in
... brief in support of the petitioners in Eldred v. Ashcroft, a case before the Supreme Court th... more ... brief in support of the petitioners in Eldred v. Ashcroft, a case before the Supreme Court that sought to have the Sonny Bono Copyright ... 2 The signatories to the amicus brief are: George A. Akerlof, Kenneth J. Arrow, Timothy F. Bresnahan, James M. Buchanan, Ronald H. Coase ...
Twenty years ago we published -The Fable of the Keys,‖ in which we presented evidence that the QW... more Twenty years ago we published -The Fable of the Keys,‖ in which we presented evidence that the QWERTY keyboard standard did not support the proposition that markets are likely to fail in choosing standards in the presence of increasing returns to adoption. We also observed that models tended to ignore those aspects of actual markets that made them unlikely to succumb to being -locked-in‖ to inferior choices. In subsequent writings, we further elaborated these points, offered a taxonomy relating different types of lock-in claims to market failure, and presented rebuttals of other proffered examples of this type of market failure. This paper examines responses to our work from leading proponents of lock-in theories which have been quite remarkable for their tone and content. Those writers now argue that their market failure theories require no empirical support at all. Further, they allege that they never cared about market failure and they never meant to have their empirical evidence taken literally. They also misunderstand or misrepresent our arguments.
Path Dependence, Lock-In, and History" Journal of Law, Economics and Organization, April 1995 11-... more Path Dependence, Lock-In, and History" Journal of Law, Economics and Organization, April 1995 11-1, pp 205-226.] Do economies and markets make remediable errors in the choice of products? Does the economy "lock-in" to these incorrect choices even when the knowledge that these choices are incorrect is readily available? The literature of path dependence may be understood to argue that these lockins and errors occur, even in a world characterized by voluntary decisions and individually maximizing behavior. In this paper we examine path dependence and illustrate three different forms of the term, each having a different implication regarding market errors and lock-in. Two of these meanings are common in the economy but provide no support for the claims that remediable errors occur. The third meaning, which does imply irremediable error, we show to be based on restrictive assumptions that are likely to be overcome in the real world. The analysis is illustrated by examining the market's choice of videorecorder formats.
Economists have defined 'network externality' and have examined putative inframarginal ma... more Economists have defined 'network externality' and have examined putative inframarginal market failures associated with it. This paper distinguishes between network effects and network externalities, where the latter are market failures. The authors argue that while network effects are important, network externalities are theoretically fragile and empirically undocumented. Some network externalities are merely pecuniary. Network ownership or transactions among network participants
New Internet-based technologies appear to threaten the ability of copyright owners to collect rev... more New Internet-based technologies appear to threaten the ability of copyright owners to collect revenues for their intellectual creations, as epitomized by the recent public trials and tribulations experienced by Napster. As a response, new legislation against pirating and new technologies to protect intellectual products has arisen. These new technologies and countertechnologies have each attracted attention and analysis, sometimes bordering on the apocalyptic, from competing camps. The basic issue, whether technologies that enhance the ability to create unauthorized copying are destructive to the principles of copyright, is not a new one, however. Technologies that make it easier to pirate copyrighted materials have undergone economic examination for over two decades. Prior analysis, and prior experience, has indicated that the previous generations of copying technologies have not had dire consequences for copyright owners.
8 Abstract It appears that the Internet is soon going to fulfill its potential to become 9 a gian... more 8 Abstract It appears that the Internet is soon going to fulfill its potential to become 9 a giant on-demand repository of television shows (and movies) available asyn-10 chronously, greatly increasing the variety of shows available at a moment in time. 11 As companies such as Netflix and Hulu increase their activities in this sphere, there 12 are many unanswered questions about the impacts of this transition. In this paper, 13 we attempt to foretell the impact of Internet-induced increased variety on the 14 amount of time individuals devote to viewing television. We use cable and satellite 15 television's impact on viewing as a proxy for the likely impact that future Internet 16 transmission of programs will have. Using country-based panel data going back to 17 the mid-1990s, we find that the increased variety brought about by cable and 18 satellite has had virtually no impact on the amount of time devoted to television 19 viewing. We discuss the import of this finding for Internet business models of 20 television transmission. 21 22 Keywords Television viewing Á Internet adoption Á Variety 23 24 25 Recreational activities are often greatly changed by new technologies. Beginning 26 with Gutenberg's printing press, new forms of entertainment have been created by 27 technological advances, including the leading recreational activities of the last 28 century-watching movies and television and listening to radio. These then-novel 29 forms of entertainment diffused throughout countries and populations at varying 30 rates depending on wealth, technological sophistication, government policy, and 31 other country characteristics. The Internet is the current new technology that has changed many aspects of 33 daily life , including communication, 34 advertising, distribution, and the focus of this paper, television viewing. The 35 Internet is likely to have several important impacts on television viewing. One, 36 which is examined in , is the substitution of the 37 Internet as a form of entertainment that competes with the types of programming 38 watched on television. A second influence is the impact of Internet piracy on the 39 markets for movies and television programs. A third influence, related to but not 40 directly caused by the Internet, is the impact of increased portability having to do 41 with the ability of portable video-players, for example in the form of smart phones, 42 to play back both streaming and saved video programming.
Felix Oberholzer-Gee and Koleman Strumpf recently responded to some of my negative assessments of... more Felix Oberholzer-Gee and Koleman Strumpf recently responded to some of my negative assessments of their influential 2007 piracy article. In this article I analyze their responses to my assessments. Several of their responses have the appearance of being plausible if they are read without reference to my actual arguments and discussion. A careful reading of my assessments and Professors Oberholzer-Gee and Strumpf’s responses, however, reveals that Professors Oberholzer-Gee and Strumpf generally misrepresent or ignore my arguments, while making numerous but untested factual assertions that are clearly refuted by the data, when tested. My negative assessments are only further enhanced by the weakness of their response, as well as by a new finding indicating that they mismatched by a week their download data and school vacation data, which would necessarily corrupt their key results.
... Finally, let us look at when foreclosure rates reached unprecedented levels that might ... un... more ... Finally, let us look at when foreclosure rates reached unprecedented levels that might ... un-precedentedness': foreclosure rates as high as the previous historical high; foreclosure rates 50 ... Table 1 Dates that Crisis Foreclosure Rates Exceeded Previous Extreme Values (Post 998 ...
Advances in the Study of Entrepreneurship, Innovation & Economic Growth, 2004
This JXlPfr jm...tigat<J Ih~'mpact of pUMo_pur """",,-0 ,/wt promol' th, UNJu,hQri"d do~"loadmg o... more This JXlPfr jm...tigat<J Ih~'mpact of pUMo_pur """",,-0 ,/wt promol' th, UNJu,hQri"d do~"loadmg of MP1 fil'. ""u' on th, "COm/aM indu",>'.
The transmission of digitized music files, particularly on filesharing networks, is having a prof... more The transmission of digitized music files, particularly on filesharing networks, is having a profound impact on the consumption and production of music. Although previous forms of copying have been found to often have benign effects on copyright owners, the rise in file -sharing has coincided with a steep decline in the sale of sound recordings. This paper attempts to empirically examine whether file -sharing has caused the decline in record sales. It examines the size and pattern of file -sharing and its theoretical impact on record sales. Using a data set for 99 American cities containing infor mation on Internet use, record sales, and other demographic variables, an econometric analys is is undertaken to explain the change in record sales before and after filesharing. The results imply that file -sharing has caused the entire decline in record sales that has occurred and also appears to have vitiated what otherwise would have been fairly robust growth in the industry. Looking at sales in individual musical genres reinforces the primary conclusions. The record industry's risky strategy of assiduous ly fighting filesharing, therefore, appears to have a rational basis.
... Stan Liebowitz School of Management University of Texas at Dallas July 2008 Abstract: Through... more ... Stan Liebowitz School of Management University of Texas at Dallas July 2008 Abstract: Through a stroke of luck, a referee report in the review process at the JPE has been positively identified as the Oberholzer-Gee/Strumpf (O/S) response to my earlier comment. ...
The file-sharing literature has focused mainly on whether file-sharing has decreased record sales... more The file-sharing literature has focused mainly on whether file-sharing has decreased record sales, with less attention paid to the size of any decline. Although there is still some contention, most studies have concluded that filesharing has decreased record sales. What has not been noted is that most estimates indicate that the file-sharing has caused the entire enormous decline in record sales that has occurred over the last decade. This heretofore hidden result is due to the lack of a consistent metric that would allow easy comparability across studies. The task of this paper is to provide such a metric, translate the results reported in the literature into that metric, and then summarizes the results from this exercise.
Although previous forms of copying have been found to often have benign effects on copyright owne... more Although previous forms of copying have been found to often have benign effects on copyright owners the rise in file-sharing has coincided with a steep decline in the sale of sound recordings. This paper attempts to empirically examine the extent, if any, to which file-sharing has caused the decline in record sales. Using a data set for 99 American cities containing information on Internet use, record sales, television viewing, radio listening, and other demographic variables, an econometric analysis is undertaken to examine the relationship between record sales and file-sharing, as proxied by Internet use, from 1998 to 2003. First, we find that the Internet itself reduces time spent on other entertainment activities, but only by a small amount. We then subtract this generic Internet impact from the overall Internet impact and conclude that the decline associated with that component of Internet use that we can attribute to file-sharing indicates that file-sharing has caused the entire decline in record sales and appears to have vitiated what otherwise would have been growth in the industry. Looking at sales in individual musical genres reinforces the primary conclusion since those genres that seem most likely to fall prey to file-sharing have the strongest measured negative impact from Internet usage.
What role does the past play in current economic conditions? Economic models usually determine eq... more What role does the past play in current economic conditions? Economic models usually determine equilibrium ending points without concern for intermediate disequilibrium conditions or the prior history of the system. That the past does play some role is obvious, but the nature of its impact requires careful delineation. Some path dependence theorists have argued that past decisions might have locked-in
... brief in support of the petitioners in Eldred v. Ashcroft, a case before the Supreme Court th... more ... brief in support of the petitioners in Eldred v. Ashcroft, a case before the Supreme Court that sought to have the Sonny Bono Copyright ... 2 The signatories to the amicus brief are: George A. Akerlof, Kenneth J. Arrow, Timothy F. Bresnahan, James M. Buchanan, Ronald H. Coase ...
Twenty years ago we published -The Fable of the Keys,‖ in which we presented evidence that the QW... more Twenty years ago we published -The Fable of the Keys,‖ in which we presented evidence that the QWERTY keyboard standard did not support the proposition that markets are likely to fail in choosing standards in the presence of increasing returns to adoption. We also observed that models tended to ignore those aspects of actual markets that made them unlikely to succumb to being -locked-in‖ to inferior choices. In subsequent writings, we further elaborated these points, offered a taxonomy relating different types of lock-in claims to market failure, and presented rebuttals of other proffered examples of this type of market failure. This paper examines responses to our work from leading proponents of lock-in theories which have been quite remarkable for their tone and content. Those writers now argue that their market failure theories require no empirical support at all. Further, they allege that they never cared about market failure and they never meant to have their empirical evidence taken literally. They also misunderstand or misrepresent our arguments.
Path Dependence, Lock-In, and History" Journal of Law, Economics and Organization, April 1995 11-... more Path Dependence, Lock-In, and History" Journal of Law, Economics and Organization, April 1995 11-1, pp 205-226.] Do economies and markets make remediable errors in the choice of products? Does the economy "lock-in" to these incorrect choices even when the knowledge that these choices are incorrect is readily available? The literature of path dependence may be understood to argue that these lockins and errors occur, even in a world characterized by voluntary decisions and individually maximizing behavior. In this paper we examine path dependence and illustrate three different forms of the term, each having a different implication regarding market errors and lock-in. Two of these meanings are common in the economy but provide no support for the claims that remediable errors occur. The third meaning, which does imply irremediable error, we show to be based on restrictive assumptions that are likely to be overcome in the real world. The analysis is illustrated by examining the market's choice of videorecorder formats.
Economists have defined 'network externality' and have examined putative inframarginal ma... more Economists have defined 'network externality' and have examined putative inframarginal market failures associated with it. This paper distinguishes between network effects and network externalities, where the latter are market failures. The authors argue that while network effects are important, network externalities are theoretically fragile and empirically undocumented. Some network externalities are merely pecuniary. Network ownership or transactions among network participants
New Internet-based technologies appear to threaten the ability of copyright owners to collect rev... more New Internet-based technologies appear to threaten the ability of copyright owners to collect revenues for their intellectual creations, as epitomized by the recent public trials and tribulations experienced by Napster. As a response, new legislation against pirating and new technologies to protect intellectual products has arisen. These new technologies and countertechnologies have each attracted attention and analysis, sometimes bordering on the apocalyptic, from competing camps. The basic issue, whether technologies that enhance the ability to create unauthorized copying are destructive to the principles of copyright, is not a new one, however. Technologies that make it easier to pirate copyrighted materials have undergone economic examination for over two decades. Prior analysis, and prior experience, has indicated that the previous generations of copying technologies have not had dire consequences for copyright owners.
8 Abstract It appears that the Internet is soon going to fulfill its potential to become 9 a gian... more 8 Abstract It appears that the Internet is soon going to fulfill its potential to become 9 a giant on-demand repository of television shows (and movies) available asyn-10 chronously, greatly increasing the variety of shows available at a moment in time. 11 As companies such as Netflix and Hulu increase their activities in this sphere, there 12 are many unanswered questions about the impacts of this transition. In this paper, 13 we attempt to foretell the impact of Internet-induced increased variety on the 14 amount of time individuals devote to viewing television. We use cable and satellite 15 television's impact on viewing as a proxy for the likely impact that future Internet 16 transmission of programs will have. Using country-based panel data going back to 17 the mid-1990s, we find that the increased variety brought about by cable and 18 satellite has had virtually no impact on the amount of time devoted to television 19 viewing. We discuss the import of this finding for Internet business models of 20 television transmission. 21 22 Keywords Television viewing Á Internet adoption Á Variety 23 24 25 Recreational activities are often greatly changed by new technologies. Beginning 26 with Gutenberg's printing press, new forms of entertainment have been created by 27 technological advances, including the leading recreational activities of the last 28 century-watching movies and television and listening to radio. These then-novel 29 forms of entertainment diffused throughout countries and populations at varying 30 rates depending on wealth, technological sophistication, government policy, and 31 other country characteristics. The Internet is the current new technology that has changed many aspects of 33 daily life , including communication, 34 advertising, distribution, and the focus of this paper, television viewing. The 35 Internet is likely to have several important impacts on television viewing. One, 36 which is examined in , is the substitution of the 37 Internet as a form of entertainment that competes with the types of programming 38 watched on television. A second influence is the impact of Internet piracy on the 39 markets for movies and television programs. A third influence, related to but not 40 directly caused by the Internet, is the impact of increased portability having to do 41 with the ability of portable video-players, for example in the form of smart phones, 42 to play back both streaming and saved video programming.
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