'Selling Less of More'? The Impact of Digitization on Record Companies

24 Pages Posted: 28 Feb 2012

See all articles by Marc Bourreau

Marc Bourreau

Telecom ParisTech

Michel Gensollen

Telecom Paris Tech

François Moreau

Université Paris 13

Patrick Waelbroeck

Telecom ParisTech

Date Written: February 27, 2012

Abstract

In this paper we use data from a survey of 151 French record companies to test the “long tail theory” at the level of the firm. More specifically, we test whether, following the “selling less of more” principle coined by Anderson (2006), record companies that have adapted to digitization (at various levels: artists’ scouting, distribution and promotion) release more new albums without having higher overall sales. We construct a production function in which the output is produced from conventional inputs of labor and capital, as well as inputs that are more specific to the recorded music industry. We consider two types of output: a commercial output (albums sales) and a creative output (number of new albums released). We show that labels that have adapted to digitization are more efficient in respect of creative output, but that there is no effect of adaptation to digitization on the commercial output, which is consistent with the predictions of the long tail theory.

Keywords: Recorded music industry, digitization, long tail, innovation

JEL Classification: Z11, O33, L2, D2

Suggested Citation

Bourreau, Marc and Gensollen, Michel and Moreau, François and Waelbroeck, Patrick, 'Selling Less of More'? The Impact of Digitization on Record Companies (February 27, 2012). Available at SSRN: https://ssrn.com/abstract=2011854 or http://dx.doi.org/10.2139/ssrn.2011854

Marc Bourreau (Contact Author)

Telecom ParisTech ( email )

46, rue Barrault
Paris Cedex 13, F-75634
France

Michel Gensollen

Telecom Paris Tech ( email )

46, rue Barrault
Paris Cedex 13, F-75634
France

François Moreau

Université Paris 13 ( email )

France

Patrick Waelbroeck

Telecom ParisTech ( email )

46 rue Barrault
F-75634 Paris, Cedex 13
France

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