Will file-sharing be the savior or the slayer of the music industry? The industry is quite sure that it knows the answer, and it has been attempting to sue the file-sharing genie back into its bottle, with limited success. Defenders of sharing argue that it actually benefits the music industry by exposing people to more artists. But for a topic this controversial, file-sharing has received limited academic scrutiny. The entire debate is in need of some good empirical evidence, which is why Norbert Michel's recent paper in Topics in Economic Analysis & Policy is so intriguing.

Though the methodology is complex, the results are straightforward: some US music consumers "could have decreased their CD purchases (prior to 2004) by about 13 percent due to Internet file sharing."

The paper, titled "The Impact of Digital File Sharing on the Music Industry: An Empirical Analysis," is the first to use the fine-grained data gathered by the Consumer Expenditure Survey (CEX). The Survey is run by the Bureau of Labor Statistics, which tracks nearly all household expenses for selected families in order to calculate numbers like the Consumer Price Index. Michel points out that such a survey has the advantage of eliminating self-serving responses, since participants have no reason to believe the data will be used to measure the effects of file-sharing.