ECON111 MICROECONOMIC PRINCIPLES
BACKGROUND AND QUESTION:
The arrival of Napster in 1999, followed by other (illegal) peer-to-peer (P2P) file-sharing technologies (e.g. Limewire, Kazaa, etc.), allowed internet users to illegally share unauthorised music and impacted the recorded music industry in a significant way. Sales of recorded music (CD albums and singles) fell dramatically and record labels began pursuing legal action against website services facilitating illegal P2P file sharing, as well as individuals caught infringing music copyright. Since this time, legal streaming services (such as Spotify and Apple Music) have entered the market and industry sales have started to recover but illegal downloading/streaming remains an important concern for the industry – particularly with the potential of block-chain technology to again disrupt the industry.
Using the basic demand and supply model as the foundation of your analysis, and importantly the concepts of consumer surplus and producer surplus, explain how the arrival of illegal P2P file-sharing technologies impacted the market for recorded music. In addition to relevant economic theories and concepts, you should also discuss some of the ethical issues that relate to illegal downloading.
You should structure your assignment around the following:
(i) Issues: Identify and explain the main economic and ethical issues related to the introduction of (illegal) P2P file-sharing technologies on the recorded music industry.
(ii) Analysis: Analyse the issues identified in (i). You must use relevant economic theory and ethical arguments.
(iii)Position: Derive your position on the issues identified in (i). You must provide evidence by interpreting, evaluating, integrating and synthesising your analysis done in (ii).
(iv) Critique: Defend your position derived in (iii) against the best possible argument(s) that may be raised in opposition to your position. You must consider the assumptions and implications of your position. (Hint: When considering consumer surplus, keep in mind consumers can derive surplus from both legal and illegal alternatives).