Displacement and complementarity in the recorded music industry: Evidence from France, joint with Marc Ivaldi, Frank Verboven, and Jiekai Zhang.

CEPR Discussion Paper n°16006, TSE Working Paper n° 21-1199

Do new digital music channels depress sales in existing channels, or are they complementary? In this paper, we assess the displacement or promotion effects between streaming, digital sales, and physical sales. We use a unique dataset of about 30 million observations with the sales and streams of over 300 thousand products observed weekly between 2014 and 2017 for the entire French market. To evaluate the impact of the newer channels on the existing channels, we exploit product-level variation in prices at the physical and digital sales channels. We obtain the following findings. At the track-level, 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.