We present a framework to evaluate the impact of digital music distribution. We set up a representative model that enables the comparative static analysis. We then interpret two empirical observations about the music industry, the sales decline and the price constancy, and fit the model to these...

The music industry is facing the development of online P2P networks, direct download services and other forms of digital piracy, while at the same time the format and promotion of pre-recorded music are undergoing major transformations with the advent of MP3 and new forms of collective...