Abstract
In this paper, I discuss the impact that paid and free digital distribution have on the number of physical sales in the creative industry from the view point of complementary effects and substitution effects. Additionally, using panel data in which products are treated as groups and episodes of TV programs are treated as series, I estimate the relationship between the number of digital distribution views and the number of package physical sales in the late-night animation market.
The results showed that the complementary effect of free digital distribution is greater than a substitution effect, so free digital distribution has a significant positive impact on the number of physical sales. It was found that the number of physical sales increases by about 0.10% when free digital distribution views increase by 1%. In addition, paid digital distribution had no significant effect. From the above, it is proposed that digital distribution leads to an increase in the consumer surplus and the producer surplus in late-night animation market at least.
Furthermore, while a more detailed analysis revealed that both paid and free digital distribution had an effect on physical sales of products aimed at men, no such effects were seen for products aimed at women. In addition, free digital distribution of original works has a positive effect on physical sales, while paid and free digital distribution of other works have no effects. It was also found that free digital distribution of works by unknown producers has a positive effect on physical sales, while paid and free distribution of works by well-known producers have no effects.
