Video Killed the Radio Star? Online Music Videos and Recorded Music Sales
Ludwig Maximilian University of Munich - Faculty of Business Administration (Munich School of Management); Centre for Economic Policy Research (CEPR)
University of Zurich - Faculty of Economics, Business Administration and Information Technology
October 28, 2015
CEP Discussion Paper No 1265
In experience goods markets, free samples help consumers make informed purchase decisions. However, sampling may also let consumers substitute purchases with free consumption. We study this trade-off in the market for recorded music where con- sumers can sample songs by watching free music videos online. Identification comes from two quasi-experiments in Germany. In 2009, virtually all official music videos were blocked from YouTube due to a legal dispute. The situation remained largely unchanged until the dedicated platform VEVO entered the market in 2013, making videos of a large number of artists available over night. We find that both restricting and enabling access to online videos has consistent complementary effects on digital music sales, but there is not much evidence for an effect on physical sales. Moreover, online videos are much more effective in triggering downloads of songs by new artists compared to established artists. This yields interesting implications for managers and policy.
Number of Pages in PDF File: 32
Keywords: Sampling, Displacement, Promotion, Sales
JEL Classification: L82, M37, D83
Date posted: April 17, 2014 ; Last revised: November 6, 2015
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