Piracy in the Music Industry: A Two-Sided Market Approach

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Platforms' paywalls fuels piracy's resurgence. Within a theoretical framework, we explore outcomes for creators of varying degrees of fame, comparing copyright and piracy scenarios to identify winners and losers.Our research reveals that piracy can eliminate the trade-off for lesser-known creators. They no longer have to sacrifice their popularity to reach a broader audience. Opting to share their work on for-profit platforms becomes a dominant strategy.However, the overall impact on welfare is not straightforward. While piracy allows more consumers to participate, it also changes the dynamics of bargaining power between less famous creators and the for-profit platform. Additionally, the shifts in equilibrium prices could lead to substitution effects.