What drives demand for playlists on Spotify?

41 Pages Posted: 20 Apr 2022

See all articles by Max J. Pachali

Max J. Pachali

Tilburg University - Tilburg University School of Economics and Management

Hannes Datta

Tilburg University

Date Written: April 9, 2022

Abstract

We study the drivers of playlist demand on Spotify - the leading music streaming platform. Our analysis relies on a unique data set that combines daily aggregate listener data for about 12,000 popular playlists with data on how prominently these playlists are featured on the platform. We model how users choose playlists and decompose demand into three major drivers: (i) persistent, time-invariant user preferences for playlists, (ii) users' responsiveness to featured playlists, and (iii) the popularity of tracks on a playlist. First, our results show that users have strong, persistent tastes for playlists owned and curated by Spotify, underscoring how important Spotify's playlist brands are for attracting and retaining listeners. Second, users value prominently featured playlists, illustrating how Spotify can effectively guide consumer attention on its platform. Third, and compared to the first two drivers, users respond less strongly to the addition or removal of (popular) tracks on a playlist, pointing to a limited role of major label content in attracting listeners. Using our demand estimates, we quantify the revenue dependencies of content suppliers on Spotify’s editorial and algorithmic decisions about playlist compositions and featured playlists in the app. We conclude with recommendations on how power asymmetries between digital platforms and their suppliers could be mitigated.

Keywords: playlist choice, playlist brands, major label power, platform dominance

Suggested Citation

Pachali, Max J. and Datta, Hannes, What drives demand for playlists on Spotify? (April 9, 2022). Available at SSRN: https://ssrn.com/abstract=4079693 or http://dx.doi.org/10.2139/ssrn.4079693

Max J. Pachali (Contact Author)

Tilburg University - Tilburg University School of Economics and Management ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

HOME PAGE: http://sites.google.com/site/mjpachali/

Hannes Datta

Tilburg University ( email )

Tilburg, 5000 LE
Netherlands

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