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Information and the Skewness of Music Sales

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  • Ken Hendricks
  • Alan Sorensen

Abstract

This paper studies the role of product discovery in the demand for recorded music. We show that releasing a new album causes a substantial and permanent increase in sales of the artist's old albums-especially if the new release is a hit. Patterns in these "backward spillovers" suggest that they result from consumers discovering the artist upon hearing the new release. To explore the implications of consumers' incomplete information, we estimate a simple, learning-based model of market demand. Our results imply that the distribution of sales is substantially more skewed than it would be if consumers were more fully informed. (c) 2009 by The University of Chicago. All rights reserved.

Suggested Citation

  • Ken Hendricks & Alan Sorensen, 2009. "Information and the Skewness of Music Sales," Journal of Political Economy, University of Chicago Press, vol. 117(2), pages 324-369, April.
    • Handle: RePEc:ucp:jpolec:v:117:y:2009:i:2:p:324-369
    DOI: 10.1086/599283
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    References listed on IDEAS

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