What Drives Demand for Playlists on Spotify?

55 Pages Posted: 20 Apr 2022 Last revised: 21 Jul 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: July 21, 2022

Abstract

We study the drivers of playlist demand on Spotify. We base our analysis on a unique panel data set that combines aggregate listener data for 12,000+ popular playlists with data on how prominently these playlists are featured in the Spotify app. We decompose demand for playlists into three major drivers: (i) time-invariant user preferences for playlists, (ii) users' responsiveness to featured playlists, and (iii) the popularity of tracks on a playlist. Our results demonstrate that users have strong preferences for playlists curated by Spotify, underscoring the importance of platform-curated playlists for stimulating consumption. Users also value featured playlists in the app, illustrating how Spotify can effectively guide attention to a selected set of playlists. In comparison, users respond weakly to the addition of popular tracks to playlists, pointing to a limited role of popular major label content in attracting listeners. Our demand estimates reveal that revenues of content suppliers asymmetrically depend on Spotify’s decisions about playlist compositions and playlist featuring. We provide novel evidence for a much lower power of the major labels, and thus music producers more broadly, compared to Spotify. We conclude with recommendations on how power asymmetries between digital platforms and their suppliers could be mitigated.

Keywords: playlist choice, music streaming, digital economy, platforms, major record labels

Suggested Citation

Pachali, Max J. and Datta, Hannes, What Drives Demand for Playlists on Spotify? (July 21, 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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