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The economic impact of streaming beyond GDP

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  • Harald Edquist
  • Peter Goodridge
  • Jonathan Haskel

Abstract

This article finds that the shift from buying music as a physical product towards subscribing to music services implies an unmeasured decrease of 85% in the price paid per song. Traditionally, price indexes have focused on tangible prices on CDs. These price indexes have partly become obsolete as more of the consumption of music is streamed. However, the price indexes for streamed music still do not capture the price paid per song. We estimate that the shift from buying CDs to streaming music online generates a price decrease of 85% per song. This implies that in 2019 the global quality-adjusted value from streamed music was $76 billion compared to current revenues of $11 billion. Thus, the shift from consuming music in physical form towards subscribing to music services creates an enormous consumer surplus that is not recorded in GDP.

Suggested Citation

  • Harald Edquist & Peter Goodridge & Jonathan Haskel, 2022. "The economic impact of streaming beyond GDP," Applied Economics Letters, Taylor & Francis Journals, vol. 29(5), pages 403-408, March.
    • Handle: RePEc:taf:apeclt:v:29:y:2022:i:5:p:403-408
    DOI: 10.1080/13504851.2020.1869158
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    References listed on IDEAS

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    1. Aguiar, Luis, 2017. "Let the music play? Free streaming and its effects on digital music consumption," Information Economics and Policy, Elsevier, vol. 41(C), pages 1-14.
    2. Aguiar, Luis & Martens, Bertin, 2016. "Digital music consumption on the Internet: Evidence from clickstream data," Information Economics and Policy, Elsevier, vol. 34(C), pages 27-43.
    3. Erik Brynjolfsson & Felix Eggers & Avinash Gannamaneni, 2018. "Measuring Welfare with Massive Online Choice Experiments: A Brief Introduction," AEA Papers and Proceedings, American Economic Association, vol. 108, pages 473-476, May.
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    More about this item

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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