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Let the music play? Free streaming and its effects on digital music consumption

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  • Aguiar, Luis

Abstract

The tremendous growth in interactive music streaming is raising questions about its effects on the music industry. While premium subscriptions offer unconstrained access to music streaming, free services typically offer limited mobility in their usage. If streaming enhances product discovery, and if consumers value mobility, then free streaming could stimulate the use of channels that allow mobile consumption. I exploit the introduction of a listening cap by the platform Deezer to identify the effect of free and mobile-restricted streaming on the music purchasing and piracy behavior of a large set of individuals. Results show that users visited licensed and unlicensed downloading websites around 2% less than they would have had the restriction not been introduced, showing a positive effect of free streaming on these alternative sources of consumption. Results also indicate heterogeneous effects of the restriction, and back of the envelope calculations suggest that the purchasing and piracy activities of lighter streamers are stimulated by free streaming to a larger extent.

Suggested Citation

  • Aguiar, Luis, 2017. "Let the music play? Free streaming and its effects on digital music consumption," Information Economics and Policy, Elsevier, vol. 41(C), pages 1-14.
    • Handle: RePEc:eee:iepoli:v:41:y:2017:i:c:p:1-14
    DOI: 10.1016/j.infoecopol.2017.06.002
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    Citations

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    Cited by:

    1. Luis Aguiar & Joel Waldfogel, 2018. "Platforms, Promotion, and Product Discovery: Evidence from Spotify Playlists," JRC Working Papers on Digital Economy 2018-04, Joint Research Centre.
    2. Marc Ivaldi & Ambre Nicolle & Frank Verboven & Jiekai Zhang, 2024. "Displacement and complementarity in the recorded music industry: evidence from France," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 48(1), pages 43-94, March.
    3. Luis Aguiar & Zhizhong Chen, 2024. "Let that Sync in: The Effect of Music Reuse on Product Discovery," CESifo Working Paper Series 11249, CESifo.
    4. Aguiar, Luis & Waldfogel, Joel, 2018. "As streaming reaches flood stage, does it stimulate or depress music sales?," International Journal of Industrial Organization, Elsevier, vol. 57(C), pages 278-307.
    5. Youming Liu, 2023. "Competition for Exclusivity and Customer Lock-in: Evidence from Copyright Enforcement in China," Staff Working Papers 23-43, Bank of Canada.
    6. Hannes Datta & George Knox & Bart J. Bronnenberg, 2018. "Changing Their Tune: How Consumers’ Adoption of Online Streaming Affects Music Consumption and Discovery," Marketing Science, INFORMS, vol. 37(1), pages 5-21, January.
    7. Jordi McKenzie & Paul Crosby & Liam J. A. Lenten, 2021. "It takes two, baby! Feature artist collaborations and streaming demand for music," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 45(3), pages 385-408, September.
    8. Carroni, Elias & Paolini, Dimitri, 2020. "Business models for streaming platforms: Content acquisition, advertising and users," Information Economics and Policy, Elsevier, vol. 52(C).
    9. Mourelatos, Evangelos & Mourelatos, Haris, 2022. "Online video sharing and revenues during the Pandemic. Evidence from musical stream data," GLO Discussion Paper Series 1050 [pre.], Global Labor Organization (GLO).
    10. Luis Aguiar & Joel Waldfogel, 2021. "Platforms, Power, and Promotion: Evidence from Spotify Playlists," Journal of Industrial Economics, Wiley Blackwell, vol. 69(3), pages 653-691, September.
    11. Yunhyoung Kim & Jeonghoon Mo, 2018. "Pricing of Digital Video Supply Chain: Free versus Paid Service on the Direct Distribution Channel," Sustainability, MDPI, vol. 11(1), pages 1-14, December.
    12. Christensen, Finn, 2022. "Streaming Stimulates the Live Concert Industry: Evidence from YouTube," International Journal of Industrial Organization, Elsevier, vol. 85(C).
    13. Mario Coccia, 2020. "Cyclical phenomena in technological change," Papers 2010.03168, arXiv.org, revised Oct 2020.
    14. Harald Edquist & Peter Goodridge & Jonathan Haskel, 2022. "The economic impact of streaming beyond GDP," Applied Economics Letters, Taylor & Francis Journals, vol. 29(5), pages 403-408, March.
    15. Arianna Martinelli & Alessandro Nuvolari & Elisa Palagi & Emanuele Russo, 2022. "Digitalization, copyright and innovation in the creative industries: an agent-based model," LEM Papers Series 2022/03, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    16. Orçun Kasap & Altug Yalcintas, 2021. "Commodification 2.0: How Does Spotify Provide Its Services for Free?," Review of Radical Political Economics, Union for Radical Political Economics, vol. 53(1), pages 157-172, March.
    17. E. Carroni & D. Paolini, 2019. "The business model of a streaming platform," Working Paper CRENoS 201902, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
    18. Hiller R. Scott & Walter Jason M., 2017. "The Rise of Streaming Music and Implications for Music Production," Review of Network Economics, De Gruyter, vol. 16(4), pages 351-385, December.
    19. Mourelatos, Evangelos & Mourelatos, Haris, 2022. "Online video sharing and revenues during the Pandemic. Evidence from musical stream data," GLO Discussion Paper Series 1050, Global Labor Organization (GLO).
    20. Amélia Maria Pinto da Cunha Brandão & Rodrigo Ferreira de Oliveira, 2019. "Internationalization Strategies in Music Festivals," Scientific Annals of Economics and Business (continues Analele Stiintifice), Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, vol. 66(2), pages 91-112, July.
    21. Shinichi Yamaguchi & Hirohide Sakaguchi & Kotaro Iyanaga & Hidetaka Oshima & Tatsuo Tanaka, 2023. "The impact of licensed and unlicensed free goods: an empirical analysis of music, video, and book industries in Japan," SN Business & Economics, Springer, vol. 3(3), pages 1-22, March.

    More about this item

    Keywords

    Music streaming; Recorded music industry; Copyright; Digitization;
    All these keywords.

    JEL classification:

    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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