Information Spillovers in the Market for Recorded Music

Ken Hendricks and Alan Sorensen

No 12263, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper studies the role of consumer learning in the demand for recorded music by examining the impact of an artist's new album on sales of past and future albums. Using detailed album sales data for a sample of 355 artists, we show that the release of a new album increases sales of old albums, and the increase is substantial and permanent—especially if the new release is a hit. Various patterns in the data suggest the source of the spillover is information: a new release causes some uninformed consumers to learn about their preferences for the artist's past albums. These information spillovers suggest that the high concentration of success across artists may partly result from a lack of information, and they have significant implications for investment and the structure of contracts between artists and record labels.

JEL-codes: D83 L15 L82 (search for similar items in EconPapers)
Date: 2006-05
New Economics Papers: this item is included in nep-com, nep-cse, nep-cul and nep-mkt
Note: IO
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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