The Napster Experiment

There is  a debate among libertarians as to whether claims to intellectual property rights ought to be maintained. A key argument made by those in favor of such rights is that they are necessary to encourage the production of  scientific and artistic works. But there is little hard empirical evidence to back up that claim.  Well before copyright laws were consolidated during the last two centuries, great figures like Plato, Dante, and Shakespeare were writing dialogues, poems, and plays.

A more recent series of events by which to explore this question is offered by Napster. Just over a decade ago, Napster established an online venue in which people could freely download music. Though closed down, a number of other music sharing services emerged to take its place. Has the quality and quantity of new music produced suffered as a result? If it has, that would strengthen the case for intellectual property rights. If it hasn’t, the incentive argument for those rights is seriously weakened.

According to Joel Waldfogel, the Napster experience has not adversely affected the production of music. In his recent paper, “Bye, Bye, Miss American Pie? The Supply of New Recorded Music Since Napster”, Waldfogel figures that any reduction in supply from the major record companies has been made up by  independent labels. Technology, too, has lowered the costs of producing and distributing  music.

Here is the abstract of the paper:

Bye, Bye, Miss American Pie? The Supply of New Recorded Music Since Napster

Joel Waldfogel
NBER Working Paper, March 2011


In the decade since Napster, file-sharing has undermined the protection that copyright affords recorded music, reducing recorded music sales. What matters for consumers, however, is not sellers’ revenue but the surplus they derive from new music. The legal monopoly created by copyright is justified by its encouragement of the creation of new works, but there is little evidence on this relationship. The file-sharing era can be viewed as a large-scale experiment allowing us to check whether events since Napster have stemmed the flow of new works. We assemble a novel dataset on the number of high quality works released annually, since 1960, derived from retrospective critical assessments of music such best-of-the-decade lists. This allows a comparison of the quantity of new albums since Napster to 1) its pre-Napster level, 2) pre-Napster trends, and 3) a possible control, the volume of new songs since the iTunes Music Store’s revitalization of the single. We find no evidence that changes since Napster have affected the quantity of new recorded music or artists coming to market. We reconcile stable quantities in the face of decreased demand with reduced costs of bringing works to market and a growing role of independent labels.

(HT: Kevin Lewis at National Affairs)

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