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 consumption channels of music depress sales in old physical ones, or are they complementary? To answer this question, we exploit product-level variation in sales and prices of over 4 million products, observed weekly between 2014 and 2017 for the entire French market. A unique feature of our data is that we observe sales for both physical and digital products, as well as streaming consumption. At the track-level, we find that streaming displaces digital 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. Our findings bridge two streams of literature as we show that substitutability between consumption channels at the product level can coexist with complementarity at a more aggregate level.