Research Note—Testing File Sharing's Impact on Music Album Sales in Cities

Using a data set including album sales, Internet penetration, and various demographic measures for 99 American cities over the period 1998–2003, this paper empirically examines the extent to which file sharing has caused the U.S. decline in sound-recording sales over that period. Also examined is the impact of the Internet on entertainment activities so as to help cleanse the Internet penetration coefficient of that impact. The conclusion from this analysis is that file sharing appears to have caused the entire decline in record sales and appears to have vitiated what otherwise would have been growth in the industry.