Digital music consumption on the Internet: Evidence from clickstream data

- We analyze the usage of different online music consumption channels.
- We find no evidence of digital sales displacement by piracy or licensed streaming.
- Effects on digital music purchasing behavior are larger for streaming than piracy.
- We find important cross country differences in these effects.
- Complementarities are larger for consumers that are more interested in music.

We use clickstream data on a panel of more than 16,500 European consumers to analyze the relationship between different online music consumption channels. In particular, we revisit the question of sales displacement in the digital era, and analyze how licensed online music streaming affects digital music purchasing behavior. Our results show no evidence of digital music sales displacement by unlicensed downloading and present, for some countries in our sample, a rather small but positive elasticity of up to 0.04 between these two channels. We also find a positive relationship between the use of licensed streaming websites and licensed websites selling digital music, suggesting a stimulating effect of music streaming on digital music sales. Our results present important cross country differences in these effects, with elasticities ranging between 0.09 and 0.01. Finally, we find heterogeneous effects according to individuals' profiles. For both unlicensed downloading and licensed streaming alike, our results suggest that consumers with higher interest in music view these channels as complements to licensed digital purchases to a larger extent.