Does Chatter Matter? the Impact of User-Generated Content on Music Sales

30 Pages Posted: 9 Oct 2008

See all articles by Vasant Dhar

Vasant Dhar

New York University (NYU) - Leonard N. Stern School of Business; New York University (NYU) - Department of Information, Operations, and Management Sciences

Elaine Chang

University of South Florida

Multiple version iconThere are 2 versions of this paper

Date Written: October 2007

Abstract

The Internet has enabled the era of user-generated content, potentially breaking thehegemony of traditional content generators as the primary sources of â¬Slegitimateâ¬? information.Prime examples of user-generated content are blogs and social networking sites, which allow easypublishing of and access to information. In this study, we examine the usefulness of such content,consisting of data from blogs and social networking sites in predicting sales in the music industry.We track the changes in online chatter for a sample of 108 albums for four weeks before and aftertheir release dates. We use linear and nonlinear regression to identify the relative significance ofonline variables on their observation date in predicting future album unit sales two weeks aheadOur findings are as follows: (a) the volume of blog posts about an album is positively correlatedwith future sales, (b) greater increases in an artistâ¬"s Myspace friends week over week have aweaker correlation to higher future sales, (c) traditional factors are still relevant ⬠albums releasedby major labels and albums with a number of reviews from mainstream sources like Rolling Stonealso tended to have higher future sales. More generally, the study provides some preliminaryanswers for marketing managers interested in assessing the relative importance of the burgeoningnumber of â¬SWeb 2.0â¬? information metrics that are becoming available on the Internet, and howlooking at interactions among them could provide predictive value beyond viewing them inisolation. The study also provides a framework for thinking about when user-generated contentinfluences decision making.

Suggested Citation

Dhar, Vasant and Chang, Elaine, Does Chatter Matter? the Impact of User-Generated Content on Music Sales (October 2007). NYU Working Paper No. CEDER-07-06. Available at SSRN: https://ssrn.com/abstract=1281347

Vasant Dhar (Contact Author)

New York University (NYU) - Leonard N. Stern School of Business ( email )

44 West 4th Street
Suite 9-160
New York, NY NY 10012
United States

HOME PAGE: http://www.stern.nyu.edu/~vdhar

New York University (NYU) - Department of Information, Operations, and Management Sciences

44 West Fourth Street
New York, NY 10012
United States

Elaine Chang

University of South Florida ( email )

Tampa, FL 33620
United States

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