Working Paper, 2007
Policies that encourage Internet use in education can lead to illegal downloading.
U.S. education policy encourages the use of computers and the Internet. As a consequence, students have better access to technologies to illictly share copyrighted music. It is important when setting up policies to enhance Internet adoption that care be taken to avoid this outcome, particularly in cases where there is no evidence that Internet usage increased student performance.
- The government’s E-Rate program provides $2.25 billion per year in subsidies for Internet connections to school districts and libraries. The E-Rate Program was designed to help schools and libraries gain access to the Internet and other digital technology, especially those serving poorer populations. The program subsidizes a portion of an eligible bid for Internet and telecommunications connections and services solicited by school districts.
- A panel of counties over the 1994-2004 period was constructed to econometrically examine the impact of this Internet subsidy to education. County business pattern data, annual E-Rate funding, and data on music stores were combined in conducting the examination.
- More funds for Internet connections in schools and libraries in a county are associated with a decline in music stores. The number of music stores fell when K-12 schools received subsidies for Internet connections, and it fell faster where college enrollment was higher. This intervention, by increasing Internet usage, could have inadvertently contributed to the decline in the music industry.