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What is the Value of Re-use? Complementarities in Popular Music

Jeremy Watson ()
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Jeremy Watson: Boston University Questrom School of Business, Department of Strategy and Innovation, 595 Commonwealth Avenue, Boston, MA 02215

No 17-15, Working Papers from NET Institute

Abstract: Digitization has drastically lowered the costs of replicating and distributing music, enabling piracy on the demand side, as well as supply side re-use and recontextualization. This paper examines cumulative creativity and re-use through the release of derivative works in the popular music industry. Combining novel data on "digital sampling" and cover songs with a new proprietary Spotify data-set tracking online music streaming, I study how the introduction of a derivative work impacts the market for the underlying good upon which it is based. With my data-set covering 11,682 artists and their daily streaming demand between 2015 and 2016, I utilize a matched-sample difference-in-differences estimator to find that, on average, re-use causes a 3% increase in demand for the treated artists. This effect is significantly mediated by prominence -- with the effect neutralized for highly prominent artists, while artists of low prominence have a larger 6% boost in listening. Novel re-uses of artists that have not been subject to extensive past re-use appear to have the largest effect, resulting in an average 15% increase in online streaming. These results highlight an advertising effect of re-use, suggest that derivative works have limited ex post competition with upstream works, and point toward the potential benefits of permissive intellectual property rights licensing.

Keywords: copyright; intellectual property; digitization; cumulative innovation; technology strategy; content industries (search for similar items in EconPapers)
JEL-codes: L24 O31 O34 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cul, nep-ino, nep-ipr and nep-pay
Date: 2017-10
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