Platform-Guided Consumption Similarity
45 Pages Posted: 15 Oct 2022
Date Written: June 30, 2022
Consumers across many industries face massive assortments and limited product knowledge. By promoting certain content, online platforms affect what users discover and consume. Policymakers worry that platforms may use their power to extract better terms from producers rather than guiding users to content that best matches their tastes. Do platforms guide large groups of users to the same content? Could this be interpreted as harming consumers, e.g., if the content is mismatched? To study these questions, we analyze music consumption for pairs of consumers around the time they adopt Spotify, a major music streaming platform. We find that users listen to substantially more of the same content after joining Spotify. However, this increase in consumption similarity is almost entirely explained by adopters consuming more variety overall instead of switching consumption to the same content. After accounting for increased variety and differential quality of content, the adoption effect either disappears or is modestly positive, depending on the specification. Heavy and new users see a larger similarity effect than light and old users. Rather than steering consumers to the same content, this paper suggests that music streaming platforms expand listening behavior while leaving aggregate diversity largely unchanged, something which consumers and artists likely find valuable.
Keywords: streaming platforms, music consumption, variety, similarity, policy
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