An investigation of the impact of online file sharing technologies on digital goods markets

Date of Completion

January 2004


Business Administration, General|Mass Communications




Advances in computer technologies have stimulated many new business opportunities in recent years. However, with potential opportunities come great challenges to business communities. Online file sharing has opened a new channel for distribution of digitized goods, but can also be utilized as a tool for unauthorized copying and distribution of such products. In spite of legal efforts to thwart these illegal activities, new file-sharing networks continue to serve millions of subscribers. The music industry whose products have increasingly become digitized is among the business communities most affected by these file-sharing networks. ^ Our earlier research has demonstrated that eliminating these file-sharing activities may not be an optimal solution for the music industry. Music sellers can potentially use file-sharing networks as an alternative marketing channel to help increase their revenue. In this dissertation, we focus on two main aspects of this research theme. First, we seek to understand how online file-sharing activities affect the success (or failure) of music products. Specifically, our first task is to construct an analytical model to explain the longevity of music albums on the Billboard chart. Empirical and simulation analyses will be used to enhance our understanding of this analytical process. The second component of this research is aimed at investigating music consumer reactions to market and non-market events. During the past year, major music distributors publicly announced and carried out legal actions against individual consumers who reportedly exchange music files. The past year also witnessed online music retailing websites that, unlike brick-and-mortar or traditional online retailers, allow consumers to download and purchase individual music files. Our second proposed task involves analyzing how file-sharing activities have been impacted by these events. Our results and understanding of their implications will have practical benefits to the music industry and other industries involving digitized goods. ^