סמינר בניהול טכנולוגיה ומערכות מידע

Professor Nils Wlömert  Vienna University of Economics and Business

Abstract

Technological innovation has severely affected many markets, and the music market has been hit particularly hard. Consumers nowadays share music via streaming platforms like YouTube, discover music via streaming services like Spotify, and many consumers have stopped purchasing music altogether. These developments challenge the distribution control of traditional intermediaries (e.g., record labels), and threaten the effectiveness of traditional marketing instruments (e.g., price, advertising). This raises the questions of how artists and music companies can generate revenue and whether traditional marketing instruments still matter in a market that is increasingly relying on access-based streaming channels. To assess these questions, we propose a framework of how artists and music companies can generate revenue in this changing environment, and how access-based streaming channels affect music sales, revenue, piracy, and marketing effectiveness. We test this framework using a unique data set covering all revenue generating channels for a sample of more than 100 music products over a period of more than two years, which we analyze using a simultaneous equation system. Although we generally find cannibalistic effects of access-based streaming channels on sales channels, these negative effects are mitigated by the revenue that these services generate and an indirect positive effect that arises because some streaming channels reduce piracy. Furthermore, the extent of sales displacement depends on the content type, with negative effects for user-generated content and positive effects for firm-controlled (promotional) content. Finally, we find that access-based streaming channels reduce marketing effectiveness and this effect is stronger for earned media compared to paid media.