Time spent on New Songs: Word-of-Mouth and Price Effects on Teenager Consumption

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Working paper
Noémi Berlin, Anna Bernard, Guillaume Fürst
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Documents de travail du Centre d'Economie de la Sorbonne
Centre d'Economie de la Sorbonne
The stardom system characterizes creative industries: the demand and revenues are concentrated on a few bestselling books, movies or music. In this paper, we study the demand structure between bestsellers and new artists' productions in the music industry. We set up an experiment where participants face real choices situations. We crate three treatments to isolate the effect of information and incentives on diversity. In a first treatment, music is consumed for free without information. In a second one, subjects receive a prior information on others' evaluation of songs to study the effect of word-of-mouth. Finally, in a thrid one, a real market is introduced and music is bought. Significant evidence shows that word-of-mouth lowers diversity, while price incentives tend to lift it. In both treatments, subjects also react to the information or incentives nature.
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