Abstract

http://ssrn.com/abstract=2425386
 


 



Video Killed the Radio Star? Online Music Videos and Digital Music Sales


Tobias Kretschmer


Ludwig-Maximilians-Universität München - Faculty of Business Administration (Munich School of Management); London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP)

Christian Peukert


University of Zurich - Department of Business Administration

April 15, 2014

CEP Discussion Paper No 1265

Abstract:     
Sampling poses an interesting problem in markets with experience goods. Free samples reveal product quality and help consumers to make informed purchase decisions (promotional effect).

However, sampling may also induce consumers to substitute purchases with free consumption (displacement effect).

We study this trade-off in the market for digital music where consumers can sample the quality of songs by watching free music videos online. Identification comes from a natural experiment in Germany, where virtually all videos that contain music are blocked on a popular video platform due to a legal dispute with representatives of the rights-holders.

We show that promotional and displacement effects cancel out in the sales performance of individual songs, whereas online music videos trigger sales of albums.

Number of Pages in PDF File: 30

Keywords: Sampling, Displacement, Promotion, Natural Experiment

JEL Classification: L82, M37, D83

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Date posted: April 17, 2014  

Suggested Citation

Kretschmer, Tobias and Peukert, Christian, Video Killed the Radio Star? Online Music Videos and Digital Music Sales (April 15, 2014). CEP Discussion Paper No 1265. Available at SSRN: http://ssrn.com/abstract=2425386 or http://dx.doi.org/10.2139/ssrn.2425386

Contact Information

Tobias Kretschmer
Ludwig-Maximilians-Universität München - Faculty of Business Administration (Munich School of Management) ( email )
Kaulbachstr. 45
Munich, 80539
Germany
London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP)
Houghton Street
London WC2A 2AE
United Kingdom
Christian Peukert (Contact Author)
University of Zurich - Department of Business Administration ( email )
Rämistrasse 71
Zurich, CH-8006
Switzerland
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