an article by Joel Walford (University of Minnesota, Minneapolis, USA and National Bureau of Economic Research, Cambridge, Massachusetts, USA) published in Journal of Economic Perspectives Volume 31 Number 3 (Summer 2017)
Digitization is disrupting a number of copyright-protected media industries,
including books, music, radio, television, and movies. Once information is
transformed into digital form, it can be copied and distributed at near-zero
marginal costs. This change has facilitated piracy in some industries, which in turn has made it difficult for commercial sellers to continue generating the same levels of revenue for bringing products to market in the traditional ways.
The recorded music industry offers a vivid example. Revenue in the recorded music industry had grown steadily throughout the twentieth century but began a precipitous slide in 1999 and has now fallen by more than half (see Figure 1).
Yet despite the sharp revenue reductions for recorded music, as well as threats to revenue in some other traditional media industries, other aspects of digitization have had the offsetting effects of reducing the costs of bringing new products to market in music, movies, books, and television. On balance, digitization has increased the number of new products that are created and made available to consumers. Moreover, given the unpredictable nature of product quality, growth in new products has given rise to substantial increases in the quality of the best products and therefore the benefit of these new products to consumers.
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