DP16006 Displacement and complementarity in the recorded music industry: evidence from France

Author(s): Marc Ivaldi, Ambre Nicolle, Frank Verboven, Jiekai Zhang
Publication Date: April 2021
Keyword(s): Digitization, Music consumption, Music industry
JEL(s): D12, L82, O33
Programme Areas: Industrial Organization
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=16006

Do new digital consumption channels of music depress sales in old physical ones, or are they complementary? To answer this question, we exploit product-level variations in prices of about 30 million sales and streams of over 300 thousand products observed weekly between 2014 and 2017 for the entire French market. At the track-level, we find that streaming displaces digital sales. Similarly, at the album level, digital sales displace physical sales. At the more aggregate artist-level, digital sales displace physical sales, but streaming implies a promotional effect on physical sales. This complementarity is driven by popular genres, i.e., Pop and Urban Music. Most of our findings are robust to whether we consider the hits or include the products that belong to the long tail.