The European Commission´s Joint Research Centre. (JRC) examined the browsing habits of 16,000 European citizens and discovered that not only does online piracy not hurt digital music revenues, it may even have a positive effect with "pirates" buying more music online than others.
The goal of this paper is to analyze the behavior of digital music consumers on the Internet. Using clickstream data on a panel of more than 16,000 European consumers, the researchers estimate the e
ffects of illegal downloading and legal streaming on the legal purchases of digital music
Most of the results were found by comparing people´s visits to pirate websites and legal music stores by following their clickstreams.
A 10 percent increase in clicks on illegal downloading websites led to a 0.2 percent increase in clicks on legal websites, irrespective of interest in music, the study found. "If this estimate is given a causal interpretation, it means that clicks on legal purchase websites would have been 2 percent lower in the absence of illegal downloading websites," according to the study.
Although positive and signi cant, our estimated elasticities are essentially zero: a 10% increase in clicks on illegal downloading websites leads to a 0.2% increase in clicks on legal purchases websites. According to the results, a 10% increase in clicks on legal streaming websites lead to up to a 0.7% increase in clicks on legal digital purchases websites.
The effect of legal streaming services, such as Spotify, on visits to music stores is even greater, and estimated at 7 percent.
The study did not include any policy recommendations, but concluded that the music industry shouldn´t be overly concerned about online piracy. However, the study did not examine the impact of illegal downloads on physical music sales such as CDs.