Digitization has drastically lowered the costs of replicating and distributing music, enabling piracy on the demand side, as well as supply side re-use and recontextualization. This paper examines cumulative creativity and re-use through the release of derivative works in the popular music industry. Combining novel data on "digital sampling" and cover songs with a new proprietary Spotify data-set tracking online music streaming, I study how the introduction of a derivative work impacts the market for the underlying good upon which it is based. With my data-set covering 11,682 artists and their daily streaming demand between 2015 and 2016, I utilize a matched-sample difference-in-differences estimator to find that, on average, re-use causes a 3% increase in demand for the treated artists. This effect is significantly mediated by prominence -- with the effect neutralized for highly prominent artists, while artists of low prominence have a larger 6% boost in listening. Novel re-uses of artists that have not been subject to extensive past re-use appear to have the largest effect, resulting in an average 15% increase in online streaming. These results highlight an advertising effect of re-use, suggest that derivative works have limited ex post competition with upstream works, and point toward the potential benefits of permissive intellectual property rights licensing.
This paper examines the effect of the expiry of recording copyright on the supply of music – in the form of re-releases and concert performances – by artists popular in the UK in the 1960s. In a sample of 11,639 tracks by 135 artists first released between 1928 and 1975, we find that the expiry of recording copyright is associated with an approximately 286-327% increase in the number of re-releases, holding constant artist, age and year fixed effects. The effect is not significantly different for the most popular artists in our sample, and is not apparent in placebo regressions on a sample of US re-releases. However, when a track’s original recording copyright expires, it becomes less likely to be performed in concert, particularly by UK-focused artists, after controlling for age, year and artist fixed effects. These results suggest that copyright term extensions may lead to fewer re-releases but more live performances of popular music first recorded approximately fifty years ago.
Although economic theory suggests that markets may tip towards a dominant platform or standard, there are many prominent examples of persistent incompatibility, inter-platform competition and standards proliferation. This paper examines the economics of forking, fragmentation and splintering in markets with network effects. We illustrate several causes of mis-coordination, as well as the tools that firms and industries use to fight it, through short cases of standardization in railroad gauges, modems, operating systems, instant messaging and Internet browsers. We conclude by discussing welfare effects of efforts to promote inter-operability.
Whereas the role of patents in cumulative innovation has been well established, little work has examined the impact that copyright policy may have on cumulative innovation in creative content industries. Utilizing U.S. federal court decisions that strengthened the breadth of copyright policy, this paper examines the implications of those decisions on the re-use of original content in the popular music industry, particularly hip-hop music. With a novel, self-collected data-set that tracks re-use through "digital sampling" in hip-hop music, I explore the impact that these federal copyright cases had on the production process of hip-hop music through changes in sampling practices. I find that digital sampling, wherein new musical works are created in part from existing sound recordings, significantly decreased following a 1991 decision that effectively strengthened rights for the original rights holder and restricted downstream re-use. Additionally, this policy change affected the creativity of new works by limiting the diversity of music that is re-used in new products. I also find that this effect on sampling was greatest in magnitude for the most prominent artists.