2015 Volume 4 Issue 1 Pages 46-51
Sales strategy that uses free digital distribution is a new business model in the creative industry. However, it has raised many important management questions the extent to which free digital distribution either crowd out or complement consumption of products. In this paper, we analyze the effect of free digital distribution on physical sales in Japanese music 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 0.27% when free digital distribution views increase by 1%. Furthermore, while a more detailed analysis revealed free digital distribution of works by unknown producers has a positive effect on physical sales, while free distribution of works by well-known producers have no effects. In addition, free digital distribution of long movies has a strong positive effect on the number of physical sales than one of short movies. It was also found that free digital distribution of pop music and idol music has a positive effect on physical sales, while free digital distribution of other music have no effects.
