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As streaming reaches flood stage, does it stimulate or depress music sales?

Luis Aguiar () and Joel Waldfogel ()

International Journal of Industrial Organization, 2018, vol. 57, issue C, 278-307

Abstract: Streaming music services have exploded in popularity in the past few years, variously raising optimism and concern about their impacts on recorded music revenue. Even if streaming displace sales, it may still raise overall revenue if the streaming payment is large enough in relation to the extent of sales displacement. We make use of the growth streaming during the years 2013–2015 to measure their collective impact on unpaid consumption and on the sales of recorded music. We are unable to statistically distinguish the distinct impacts of these services, but we reject that their combined impact on sales is zero. We also find that streaming displaces music piracy. Given the current industry’s revenue from track sales ($0.82 per sale) and the average payment received per stream between $1.51 and $2.77 per thousand streams or, on average, about $2.14 per thousand streams, our sales displacement estimates show that the losses from displaced sales are roughly outweighed by the gains in streaming revenue.

Keywords: Music streaming; Music industry; Copyright (search for similar items in EconPapers)
JEL-codes: K42 L82 O34 O38 (search for similar items in EconPapers)
Date: 2018
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