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Selling Less of More: The Impact of Digitization on Record Companies

Author

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  • Marc Bourreau

    (CREST - Centre de Recherche en Économie et Statistique - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz] - X - École polytechnique - ENSAE Paris - École Nationale de la Statistique et de l'Administration Économique - CNRS - Centre National de la Recherche Scientifique, ECOGE - Economie Gestion - I3 SES - Institut interdisciplinaire de l’innovation de Telecom Paris - Télécom ParisTech - I3 - Institut interdisciplinaire de l’innovation - CNRS - Centre National de la Recherche Scientifique, SES - Département Sciences Economiques et Sociales - Télécom ParisTech)

  • Michel Gensollen

    (ECOGE - Economie Gestion - I3 SES - Institut interdisciplinaire de l’innovation de Telecom Paris - Télécom ParisTech - I3 - Institut interdisciplinaire de l’innovation - CNRS - Centre National de la Recherche Scientifique, SES - Département Sciences Economiques et Sociales - Télécom ParisTech)

  • François Moreau

    (CEPN - Centre d'Economie de l'Université Paris Nord - UP13 - Université Paris 13 - USPC - Université Sorbonne Paris Cité - CNRS - Centre National de la Recherche Scientifique)

  • Patrick Waelbroeck

    (ECOGE - Economie Gestion - I3 SES - Institut interdisciplinaire de l’innovation de Telecom Paris - Télécom ParisTech - I3 - Institut interdisciplinaire de l’innovation - CNRS - Centre National de la Recherche Scientifique, SES - Département Sciences Economiques et Sociales - Télécom ParisTech)

Abstract

In this paper, we use data from a survey of 151 French record companies to test the ‘‘long-tail'' hypothesis at the level of the firm. More specifically, we test whether, following the ‘‘selling less of more'' principle coined by Anderson (2006), record companies that have adapted to digitization (at various levels: artists' scouting, distribution, and promotion) release more new albums without having higher overall sales. We construct a production function in which the output is produced from conventional inputs of labor and capital, as well as inputs that are more specific to the recorded music industry. We consider two types of output: a commercial output (albums sales) and a creative output (number of new albums released). We show that labels that have adapted to digitization are more efficient in respect of creative output, but that there is no effect of adaptation to digitization on the commercial output, which is consistent with the predictions of the long-tail hypothesis.

Suggested Citation

  • Marc Bourreau & Michel Gensollen & François Moreau & Patrick Waelbroeck, 2013. "Selling Less of More: The Impact of Digitization on Record Companies," Post-Print hal-01345110, HAL.
    • Handle: RePEc:hal:journl:hal-01345110
    DOI: 10.1007/s10824-012-9184-4
    Note: View the original document on HAL open archive server: https://hal.science/hal-01345110
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    Cited by:

    1. Juan D. Montoro-Pons & Manuel Cuadrado-García, 2018. "“Let’s make lots of money”: the determinants of performance in the recorded music sector," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 42(2), pages 287-307, May.
    2. 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.
    3. Stéphanie Peltier & Françoise Benhamou & Mamoudou Touré, 2016. "Does the long tail really favor small publishers?," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 40(4), pages 393-412, November.
    4. Olena Khlystova & Yelena Kalyuzhnova, 2023. "The impact of the creative industries and digitalization on regional resilience and productive entrepreneurship," The Journal of Technology Transfer, Springer, vol. 48(5), pages 1654-1695, October.
    5. Scott Hiller, R., 2016. "Sales displacement and streaming music: Evidence from YouTube," Information Economics and Policy, Elsevier, vol. 34(C), pages 16-26.

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    More about this item

    Keywords

    Recorded music industry; Digitization; Long tail; Innovation;
    All these keywords.

    JEL classification:

    • Z11 - Other Special Topics - - Cultural Economics - - - Economics of the Arts and Literature
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • D2 - Microeconomics - - Production and Organizations

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