Stars vs. Underdogs in Online Music Markets: The Effect of IT on Visibility, Artists’ Broadcasting, and Fans’ Activities
30 Pages Posted: 27 May 2014
Date Written: May 26, 2014
In cultural markets, for books, music or movies, sales are concentrated on a small number of highly successful products. One explanation for the skewness of sales is incomplete information: consumers are poorly informed about most products, because only a small proportion of them are visible and promoted in the offline world. With digitization, as suggested by the Long Tail hypothesis, the increasing visibility of niche products could improve consumer information, and thus reduce sales concentration. In this paper, we study whether, in the music industry, online promotion improves the visibility of “underdog” artists or that of “stars”. We use an original and large dataset of indicators for visibility, both offline (i.e., press coverage) and online (e.g., Facebook, Twitter, MySpace, YouTube, or LastFm), for about 1,000 artists over a 6-month period following a new album release. First, we investigate the extent to which the Internet democratizes access to visibility, and we examine the online promotional actions taken by artists and their fans to overcome a potential lack of visibility. We find that, while the most popular and visible artists offline are also the most visible online, audiences of underdog and debut artists are more strongly engaged to support their promotion efforts. Then, we use a panel vector autoregression (PVAR) model to explore the interplay between artists’ broadcasting activities (artist-generated content), fans’ activities (user-generated content), artists’ online reputation (number of fans) and a free form of online consumption (music streaming), according to the artist’s visibility in the traditional media channels. Our main results suggest that the promotion supported by online audiences has a positive effect on music streaming only for underdog artists, whereas artists’ broadcasting activities in social media have no direct impact on music streaming.
Keywords: Social Media, Long Tail, Word-of-Mouth, Music Industry, Artists, Marketing
JEL Classification: L82, M3
Suggested Citation: Suggested Citation