Don't Play It Again, Sam: Radio Play, Record Sales, and Property Rights

Intellectual Property and Copyright and Trademark

Article Snapshot

Author(s)

Stan Liebowitz

Source

Working paper, January 2007

Summary

Radio play does not boost record sales as typically thought, but exerts a economically important negative impact.

Policy Relevance

The findings suggest property rights should be granted to sound recordings played on the radio, and then let the market determine the outcome; however, current policy has moved in a different direction.

Main Points

  • Radio play does not have the positive impact on record sales normally attributed to it.

  • Radio listening is an activity that is often a substitute for listening to prerecorded music, and appears to have an economically important negative impact.

  • It is possible for radio play to increase the sales of those sound recordings played on radio while at the same time reduce overall sales of sound recordings. This exposes a fallacy of composition in applying to an entire market a generally accepted positive relationship that holds for individual units.

  • Cities where audience listening to music radio stations usage increased the most also had the largest decline in sound recording sales over the period 1998 to 2003. This was the result of a fixed effects regression holding constant various socioeconomic variables and also controlling for Internet piracy.

  • Creating a set of property rights to allow this market to function properly is different than has been suggested by prior research. New technologies changing the nature of radio broadcasts are likely to make this topic increasingly important in the coming years.

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