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Video Killed the Radio Star? Online Music Videos and Digital Music Sales

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  • Tobias Kretschmer
  • Christian Peukert

Abstract

Sampling poses an interesting problem in markets with experience goods. Free samples reveal product quality and help consumers to make informed purchase decisions (promotional effect). However, sampling may also induce consumers to substitute purchases with free consumption (displacement effect). We study this trade-o_ in the market for digital music where consumers can sample the quality of songs by watching free music videos online. Identification comes from a natural experiment in Germany, where virtually all videos that contain music are blocked on a popular video platform due to a legal dispute with representatives of the rights-holders. We show that promotional and displacement effects cancel out in the sales performance of individual songs, whereas online music videos trigger sales of albums.

Suggested Citation

  • Tobias Kretschmer & Christian Peukert, 2014. "Video Killed the Radio Star? Online Music Videos and Digital Music Sales," CEP Discussion Papers dp1265, Centre for Economic Performance, LSE.
    • Handle: RePEc:cep:cepdps:dp1265
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    Cited by:

    1. Luis Aguiar & Joel Waldfogel, 2015. "Streaming Reaches Flood Stage: Does Spotify Stimulate or Depress Music Sales?," NBER Working Papers 21653, National Bureau of Economic Research, Inc.
    2. Bradley, Wendy A. & Kolev, Julian, 2023. "How does digital piracy affect innovation? Evidence from software firms," Research Policy, Elsevier, vol. 52(3).
    3. Lisa M. George & Christian Peukert, 2014. "YouTube Decade: Cultural Convergence in Recorded Music," Working Papers 14-11, NET Institute.
    4. Aguiar, Luis & Waldfogel, Joel, 2018. "As streaming reaches flood stage, does it stimulate or depress music sales?," International Journal of Industrial Organization, Elsevier, vol. 57(C), pages 278-307.
    5. Luis Aguiar, 2015. "Let the Music Play? Free Streaming, Product Discovery, and Digital Music Consumption," JRC Working Papers on Digital Economy 2015-16, Joint Research Centre.
    6. Ramadan Aly-Tovar & Maya Bacache-Beauvallet & Marc Bourreau & Francois Moreau, 2020. "Why would artists favor free streaming?," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 44(2), pages 255-280, June.
    7. Essling, Christian & Koenen, Johannes & Peukert, Christian, 2017. "Competition for attention in the digital age: The case of single releases in the recorded music industry," Information Economics and Policy, Elsevier, vol. 40(C), pages 26-40.
    8. Alexander Cuntz & Matthias Sahli, 2024. "Intermediary liability and trade in follow-on innovation," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 48(1), pages 1-42, March.
    9. Lee, Jonathan F., 2018. "Purchase, pirate, publicize: Private-network music sharing and market album sales," Information Economics and Policy, Elsevier, vol. 42(C), pages 35-55.
    10. Christian Peukert, 2019. "The next wave of digital technological change and the cultural industries," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 43(2), pages 189-210, June.
    11. Hiller R. Scott & Walter Jason M., 2017. "The Rise of Streaming Music and Implications for Music Production," Review of Network Economics, De Gruyter, vol. 16(4), pages 351-385, December.
    12. Aguiar, Luis & Martens, Bertin, 2016. "Digital music consumption on the Internet: Evidence from clickstream data," Information Economics and Policy, Elsevier, vol. 34(C), pages 27-43.

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    More about this item

    Keywords

    Sampling; displacement; promotion; natural experiment;
    All these keywords.

    JEL classification:

    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
    • M37 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Advertising
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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