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The impact of licensed and unlicensed free goods: an empirical analysis of music, video, and book industries in Japan

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Abstract

In this study, we analyze that how free goods, such as music video provided freely, affect sales of contents in the Japanese creative industries. The contributions of this study are below three points: (1) we focus on three major creative industries: music industry, video industry, and book industry. (2) We focus on the impact of both licensed and unlicensed free goods. (3) We use a large amount of questionnaire survey data, and then we use unique instrumental variables “Preferences of using free goods on the Internet.” As the results, licensed free goods have a significant positive effect on paid goods in the music industry with an elasticity of 0.11, but no significant effect in the video and book industries. Unlicensed (pirated) free goods have no significant effects in the book industry, but have a significant negative effect in the music and video industries with elasticities of − 0.23 and − 0.19, respectively.

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Fig. 1

Source: The Recording Industry Association of Japan

Fig. 2

Source: International Federation of the Phonographic Industry (2019)

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Data availability statement

The datasets generated during and/or analyzed during the current study are not publicly available because respondents did not consent to the release of their individual data.

Notes

  1. Freemium is the business model whose baseline service is free to use and users pay charge to use premium service (Anderson 2009).

  2. We do not consider the game industry in this study. Games are goods encompassing consumers’ own experiences, so pirated copies are not circulating via convenient service such as video sharing websites. Furthermore, mobile games that belong to a significantly different business model are becoming mainstream in the game industry.

  3. For example, although the size of the market for books (physical goods) in Japan peaked at about 1,100 billion yen in 1996, now it is about 740 billion yen (All Japan Magazine and Book Publisher’s and Editor’s Association, 2016).

  4. In brief, we assume that the utility derived from free online distribution is smaller than the utility derived from paid goods. Piolatto and Schuett (2012) also made this assumption.

  5. If the usage time of official free goods increases by 1%, the consumption of paid goods increases by about 0.11%.

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Acknowledgements

This work was supported by JSPS KAKENHI Grant Number 16K21447, 18K12882 and JP21K12586. We are very grateful for this support.

Funding

This work was supported by JSPS KAKENHI Grant Number 16K21447, 18K12882 and JP21K12586.

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Authors and Affiliations

  1. Center for Global Communications, International University of Japan, Tokyo, Japan

    Shinichi Yamaguchi, Kotaro Iyanaga & Hidetaka Oshima

  2. Faculty of Economics, Keio University, Tokyo, Japan

    Hirohide Sakaguchi & Tatsuo Tanaka

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  1. Shinichi Yamaguchi
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  2. Hirohide Sakaguchi
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Correspondence to Shinichi Yamaguchi.

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The authors declare that they have no conflicts of interest.

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All study participants provided informed consent, and the study design was approved by the appropriate ethics review board.

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Consent was obtained from the respondents when data were obtained.

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Yamaguchi, S., Sakaguchi, H., Iyanaga, K. et al. The impact of licensed and unlicensed free goods: an empirical analysis of music, video, and book industries in Japan. SN Bus Econ 3, 65 (2023). https://doi.org/10.1007/s43546-023-00439-y

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