Abstract and Keywords
This article reports the empirical literature on digital piracy. While piracy is undoubtedly an important threat brought by the Internet, it is vital to note that new technology also brings reduced costs and an opportunity for firms to engage in new strategies, including new models of pricing which may diminish the blow from piracy. In principle, the appearance of file sharing might have stimulated legal demand for recorded music. If file sharing decreases the revenue that sellers receive, it may alter the nature and number of products brought forth and made available to consumers. Movies and music differ in the full cost of consumption, including time. Even though file sharing has probably harmed sellers, its benefit to consumers has exceeded its costs to sellers, at least in the static analysis.
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