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

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.