Evidence of the Effect of Free Music Downloads on the Purchase of Music CDs in Canada

This paper examines data on the effects of Internet peer-to peer (P2P) file sharing activities on music purchasing. The data was obtained from a survey commissioned by Industry Canada to “inform Industry Canada's policy development work” regarding copyright law reform in Canada. The paper focuses on an important survey question which has not yet been analysed. Analysis of survey responses suggests that P2P file-sharing is a substitute for legitimate music purchases and has strong negative effects on legitimate music purchases. This contradicts the results of earlier analysis of the data commissioned by Industry Canada first published on Industry Canada's website in 2007 (Andersen and Frenz, 2007), and then subsequently revised and republished as Andersen and Frenz (2010)