New technology and market structure: Evidence from the music recording industry

This paper explores how new scale-reducing technology induced two periods of substantial new entry into the music recording industry. Many of the new firms were product innovators, whose products became popular with consumers. This in turn leads to shifts in the distribution of industry market share, and hence market structure. Reconcentration in the industry resulted largely from horizontal mergers, among other reasons. New digital distribution networks may induce a third-wave of industry deconcentration.     

How effective are international copyright conventions in the music industry?

The paper is concerned with the issue of whether international copyright legislation is effective in curbing audio software counterfeiting. The paper finds that copyright conventions have not been effective in reducing audio counterfeiting to comparatively low levels. This result holds even when allowances are made for the duration of copyright convention membership and the specificity of the articles of the convention. Economic development is found to be the main determinant of low counterfeit levels. This would tend to support anecdotal evidence which indicates that economic development is a necessary condition for the active recognition of audio property rights by the general public, judiciary and police. It is also consistent with a view that pirate audio software, being an inferior good, has a more buoyant market in less developed economies. From a policy perspective the research would seem to suggest that the extensive efforts and copious attention to detail by legal experts has made little impact on counterfeit activity and is secondary in importance to the socio-economic environment in which these laws are being applied.     

Superstar effects on royalty income in a performing rights organization

This paper examines the economic accomplishments of individual members in a Performing Rights Organization (PRO), sometimes referred to as a Performing Rights Society. Today, there is the growing importance of intellectual property and copyright protection for authors and creators of literary, dramatic, musical, artistic and other intellectual works. The digital age has placed added pressure on songwriters, lyricists and composers in their ability to derive economic benefits from their intellectual creativity in the form of a copyright. Copyright laws protect and enable the creation of music by allowing authors and composers to license the control and use of their creations, and receive compensation in the form of royalty payments for their work. The PROs license, collect and distribute royalty payments for non-dramatic public performances of copyrighted musical works created and owned by its members or affiliates. In this paper, skewness and heavy tail of returns in the form of member royalty payments are estimated using the skew-normal and skew-t distributions in a parametric approach. We found strong evidence of the so-called ‘superstar effect’ in which the average royalty payment made by a PRO is still dominated by extreme outcomes, and relatively few members earned a substantial share of royalty payments from blockbuster hits that have endured over time. There is little evidence of smaller niche members dominating or replacing the ‘superstars.’ Economists and others will benefit from this empirical study which emphasizes a new understanding of the music industry from a PRO, member royalty payment and performance copyright perspective.     

Children of performing arts,the economic dilemma: The climbing costs of health care and education

Journal of Cultural Economics -     

Music consumption at the dawn of the music industry: the rise of a cultural fad

This paper discusses the extent to which sociodemographic characteristics of consumers and their past consumption are less effective in explaining the decision of purchasing a cultural good than the characteristics of the product itself, which allow for imitative behaviors and are at the basis of distinction. While the former approaches are well documented in the literature, the latter refers to Bourdieu’s idea of objectified cultural capital, which has been revisited and empirically explored. Because the various causal effects interact with each other, this paper tests a theoretical model which matches individual characteristics of the consumer with the properties of the cultural product. Specifically, we discussed the emergence of a new version of a cultural good, which is able to broaden the dimension of the market by gaining rapid success in its audience. This diffusion pattern is a quite rare event, but disruptive for the market and extremely profitable for the producer. The authors label this occurrence a disruptive cultural fad and try to understand the determinants of its adoption. The hypotheses of the model are tested on a unique dataset of microdata of purchasing transactions in Milan in the early nineteenth century, when the music by Gioachino Rossini emerged as a disruptive cultural fad at the dawn of the music industry. Results show that key features of a successful disruptive cultural fad are the role of some specific patterns of personal past consumption, the capabilities of generating positive network externalities in the consumption, and, surprisingly, the lack of negative ones due to any possible hip or snob effect.     

Evaluating the effects of direct support on the economic situation of artists

The paper deals with the relationship between direct public support for artists and the economic situation of artists. The empirical findings stem from a research project on the situation of artists in Finland. Some problems connected with obtaining relevant data on artists' economic situation are presented. The effects of direct financial support granted to individual artists on their income level and income discrepancies are illustrated with different patterns of impact. A brief presentation of the goals and measures of public policy towards artists in Finland is given, and the relationship with policy objectives and income effects of direct artists support is discussed. Two issues relevant for evaluating artist policy are raised: the need to account for the fundamental differences between art fields and artistic occupations, and the need to study the actual functions grant income has for the artists.     

Selection models in the music industry: How a prior independent experience may affect chart success

The is article analyses the two main approaches for artists’ selection in the recording industry: the direct model in which large major companies directly choose new artists from the supply market, and the agency model in which small independent labels realise the first choice and, subsequently, large organisations pick their new artists among those pre-selected by independents.An empirical analysis of chart sales reveals that artists selected through the agency model exhibit a longer presence on the chart due to repeated successes, while they are slower to reach heavy success once they have entered the chart. Conversely, the direct model leads to artists with a faster path to a strong success, but the same artists have a shorter presence on the chart due to the sporadic nature of their success. The profile of artists selected through these two models is also found to be different: big international soloist stars are more frequently selected through the direct model, while national bands are more frequently selected through the agency model.The insights suggest important implications for management in the cultural industries and especially in the recording industry. Jel Codes: L82; O32     

Economic circumstances of the performing artist: Baumol and Bowen thirty years on

Journal of Cultural Economics -     

Determinants of music copyright violations on the university campus

The protection of copyrights in the music industry has been of paramount concern as the popularity of digital music players, personal websites, and file-sharing continues to grow, each of which subsequently contributes to the persistence of Internet music piracy. While the Recording Industry Association of America (RIAA) links file-sharing to copyright piracy, others argue that file-sharing allows maximum exposure of artists’ music which in turn increases its value. While this debate continues, little empirical research has specifically addressed the behavioral aspects of the consumer. In this paper, we use survey data on university students to study how attitudes toward copyright law along with economic and demographic factors affect the extent of music copyright violations. We find that while students are responsive to economic incentives and perceptions of risk, the extent of these incentives has not reversed the overall propensity to engage in file-sharing.

The effects of having more than one good reputation on distributor investments in the film industry

Reputations of organizations and its individual members are valuable resources that help new organizations to get access to investment capital. Reputations, however, can have different dimensions. In this paper, we argue that an individual??s reputation along a particular dimension will have a positive effect on the behavior of investors when it is role congruent. In addition, we argue that also scoring favorably on the role-incongruent dimension at the same time??or, in other words, engaging in reputational category spanning??will weaken the positive effect of the role-congruent reputation. Our empirical setting is the film industry where we study the effect of the two main dimensions of reputation in cultural industries, artistic and commercial, of both directors and producers on the size of the investment by distributors. In this study, artistic reputation is based on professional critics?? reviews and commercial reputation on box office performance of the films in which individuals were involved in the past. We find that the commercial reputation of a film producer based on past box office performance has a positive effect on the size of the investment by film distributors. In addition, we find that directors who at the same time combine both a favorable commercial as well as an artistic reputation actually receive a lower investment from film distributors.     

Economics of music publishing: copyright and the market

The paper argues that the paradigmatic shift from the sale of printed music to exploiting and managing musical rights that took place in music publishing during the early years of the twentieth century was due to the changing market rather than to changes in copyright law. On the one hand, copyright law was ineffectual in controlling piracy throughout the nineteenth century, and on the other hand, performing rights were ignored by music publishers for over 70 years; these points suggest that copyright was not the main reason behind the success of the industry. Rather than leading entrepreneurially (the current view of dynamism in the creative industries), publishers ‘followed the money’ and adapted their business models only when new streams of income from new forms of exploitation through sound recording, broadcasting and film became available as a result of exogenous technical progress. Publishers were locked-in to sales revenue as their business model, though when switching to the new business model of rights management took place, the costs seem not to have been greatly significant. The paper takes an historical approach to the development of music publishing viewed through the lens of present-day issues. The research has resonance for the transition from sales to licensing digital works that is taking place in the creative industries today and puts into perspective the relative significance of market forces and copyright law in the process.     

Past,present and future: music economics at the crossroads

This paper contextualises research on the economics of music. The papers considered represent a crossroad in economics music research. One branch is the most heavily explored area of the impact of digital technology on consumption of music. The others comprise one entirely new topic which is crowd-sourced funding of new music recordings. The other topics are extremely old in terms of relevance but very new in terms of there being little prior economic analysis. These are environmental damages from musical activity and the efficiency of belonging to a pop–rock musical ensemble versus being a solo artist.     

The editorial playlist as container technology: on Spotify and the logistical role of digital music packages

ABSTRACT

This article explores the role of editorial playlists in Spotify’s streaming economy. In particular, it approaches Spotify’s playlists as container technologies – i.e. technical solutions that assemble, preserve, and transport music objects and thereby uphold logistical operations within the music industry. Such an approach seeks to complement previous research concerning playlists, which has often analyzed their emotional and affective dimensions but paid less attention to how playlists enhance calculative, mathematical, and logistical retail flows within the online music economy. On the one hand, the article considers how playlists – like containers in general – materialize principles of modularization and automation in ways that enhance control and remote oversight. On the other hand, it discusses how the playlist is far from a perfected means of measurement and control, and sometimes acts as an unruly transport device. Ultimately, the article shows how the playlist format occupies an uneasy position between order and disorder within the digital music economy which has not yet been fully accounted for in the context of music-oriented media studies.