The economics of copying in light of superstars

Here is an argument I had not thought of, courtesy of Francisco Alcalá and Miguel González-Maestre:

We provide a new perspective on the impact of unauthorized copying and copy levies on artistic creation. Our analysis emphasizes three important aspects of artistic markets: the predominance of superstars, the dynamics of talent sorting, and the importance of promotion expenditures. In the short run, piracy reduces superstars’ earnings and market share, and increases the number of niche and young artists. From a dynamic perspective, piracy may help more young artists start their careers, thereby increasing the number of highly talented artists in the long run. The long run impact on artistic creation of levies on copy equipment may crucially depend on whether their yields primarily accrue to superstars or are allocated to help young artists.

I wonder, though, if piracy doesn't increase the returns to the most popular market superstars.  There are also expressive reasons for purchasing cultural commodities.  If you own copies of so many cultural outputs — possibly illegal copies — maybe you shell out for the real thing for the few "must-have" cultural products that everyone else is buying.  Imagine for instance a mother who buys her child the new Harry Potter on the first day because it is a "relic" of sorts and everyone else is getting it right away.  Or maybe a teenager wishes to "affiliate" with Eminem (in the old days) by actually buying and owning a copy of the best Eminem CD.

Hat tip goes to Eric John Barker.

By the way, here's a claim that Spain is responsible for twenty percent of the world's downloads.


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