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Another loudness war: how record labels compete for consumer attention


Essling, Christian; Koenen, Johannes; Peukert, Christian (2015). Another loudness war: how record labels compete for consumer attention. SSRN 2444708, University of Zurich.

Abstract

In markets with thousands of products, firms cannot take it for granted that con-sumers are even aware of their articles’ existence. Advertising and actions to attract consumer attention are therefore integral components of a firm’s competitive toolbox. We study firms’ behavior in a perfect example for such a market: The music indus-try, in which consumers can choose from a plethora of albums and songs. We study a specific strategic instrument of firms, single releases, applying unique micro-level data. Arguing that the digitization of the industry via MP3, filesharing, and iTunes amounts to forced unbundling, the role of singles has changed from individual rev-enue generators (pre-digital era) to pure attention gatherers. In accordance with this driving hypothesis, we observe an inverse U-shaped relationship between competition intensity and the number of singles released in the digital era, while previously com-petition had a purely negative effect.

Abstract

In markets with thousands of products, firms cannot take it for granted that con-sumers are even aware of their articles’ existence. Advertising and actions to attract consumer attention are therefore integral components of a firm’s competitive toolbox. We study firms’ behavior in a perfect example for such a market: The music indus-try, in which consumers can choose from a plethora of albums and songs. We study a specific strategic instrument of firms, single releases, applying unique micro-level data. Arguing that the digitization of the industry via MP3, filesharing, and iTunes amounts to forced unbundling, the role of singles has changed from individual rev-enue generators (pre-digital era) to pure attention gatherers. In accordance with this driving hypothesis, we observe an inverse U-shaped relationship between competition intensity and the number of singles released in the digital era, while previously com-petition had a purely negative effect.

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Additional indexing

Item Type:Working Paper
Communities & Collections:03 Faculty of Economics > Department of Business Administration
Dewey Decimal Classification:330 Economics
Language:English
Date:2015
Deposited On:23 Aug 2019 09:16
Last Modified:25 Sep 2019 00:42
Series Name:SSRN
Number of Pages:39
OA Status:Green
Free access at:Official URL. An embargo period may apply.
Publisher DOI:https://doi.org/10.2139/ssrn.2444708
Official URL:http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2444708
Other Identification Number:merlin-id:11513

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