Digitization and the Market for Physical Works: Evidence from the Google Books Projects

The free digital distribution of creative works could cannibalize demand for physical versions, but it could also boost physical sales by enabling consumers to discover the original work. We study the impact of the Google Books digitization project on the market for physical books. We find that digitization significantly boosts the demand for physical versions and provide evidence for the discov-ery channel. Moreover, digitization allows independent publish-ers to introduce new editions for existing books, further increasing sales. Our results highlight the potential of free digital distribu-tion to strengthen the demand for and supply of physical products. (JEL D12, L82, L86)