Information and the Skewness of Music Sales

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...

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Bibliographic Details
Published in:The Journal of political economy 2009-04, Vol.117 (2), p.324-369
Main Authors: Hendricks, Ken, Sorensen, Alan
Format: Article
Language:English
Subjects:
Art dealing
Art periods
Artists models
Consumer behaviour
Consumer economics
Contrafactuals
Demand
Distribution
Economic theory
Information
Leisure industry
Mass markets
Media
Music
Musical recordings
Parametric models
Performing artists
Political economy
Product labeling
Sales
Sales catalogs
Sales distribution
Studies
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Summary: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.
ISSN:0022-3808
1537-534X
DOI:10.1086/599283