the effect of digital sharing technologies on music markets : a survival analysis of albums on...

Bhattacharjee, S., Gopal, R. D., Lertwachara, K., Marsden, J. R., & Telang, R. (2007)MSB 881, Prof. Chulho LeeTeam Illari: Ileana, Lamia, RiriNovember 29th, 2016

Sudip BhattacharjeeAssociate Professor, School of Business - University of Connecticut

Interested in Fields such as :❏ Economics of Information Systems❏ Piracy and Intellectual Property Rights❏ Digital Goods and Markets❏ Supply Chain❏ Energy Informatics❏ Process Modelling & System Dynamics

# 1678

Ram D. GopalProfessor, Department Head, -University of Connecticut

Interested in Fields such as :❏ MIS & Database management❏ economics of information systems

management, ❏ database design and security issues, ❏ Economic and ethical issues relating to

software piracy and organization impacts of information technology.

#3694

➔ It Has #190 Citations as per Nov 24th, 2016

Fields of Study of Citing Papers:❏ Piracy Issues❏ Digital music, movies and business strategy❏ Social Networks, User Generated Contents❏ Innovation

About this paper:

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““Music Industry and Digital

Sharing”

The effect of digital sharing technologies on music markets: A survival analysis of albums on ranking charts

2007 , 1995 - 2003, 100, 2

3

Contents:

- Context & Concepts- Research Idea

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1.Context & Concepts

- Music Industry + Technology Timeline- Big Picture- Concepts

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Music Industry + Technology

Phase 1:

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20031995

Event Window 1 Event Window 2

Phase 2:

enacted new Act & Sanctions to individuals who shared files

“Effect” in Music Markets:

(Supporting) (Against)

- Easier information sharing and sampling enhance access to music

- Sampling Mechanisms lead to more sales

- There are other factors asides from P2P Sharing that affect Music Industry Growth (Competition from other audiovisual industries, Macroeconomic Conditions)

- Music Shipments (Units & $ Value) Sharp Decrease

- Enhances Free Riders - Undermine Market Efficiencies due

to free exchange of music

P2PSHARING

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Concepts

BillboardP2P Music

P2P file sharing allows users to access media files such as books, music, movies, and games using a

P2P software program that searches for other connected computers on a P2P network to locate the desired

content.

(Google Define)

Billboard is an American entertainment media brand owned

by Prometheus Global Media. It publishes pieces involving news,

video, opinion, reviews and events. It is also known for its music charts,which track the most

popular singles and albums in different genres.

(http://www.billboard.com/faq)

“An experience good whose true value is revealed only after

consumption, a product whose evaluation is based primarily on

personal experience and individual consumer taste”

(Nelson, 1970)

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Concepts

Billboard’s Top 100 Charts

Level of Sharing

Album Survival

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P2P file sharing allows users to access media files such as books, music, movies, and games using a

P2P software program that searches for other connected computers on a P2P network to locate the desired

content.

(Google Define)

Album survival captures the “Popular-life” of an album.

Appearance and continued presence of an album on the chart has

important economic implications and influence on awareness,

perceptions and profits.

(Bradlow & Fader, 2001)

The Billboard charts tabulate the relative weekly popularity of singles or albums in the United

States and elsewhere. The results are published in Billboard magazine.

(http://www.billboard.com/faq)

Why Billboard?

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30,000 Albums produced in US Music

Industry

Album (Entity)Characteristics:

- Label: Minor, Major- Superstardom- Artisti: Group,

Single, Male, Female

Billboard’sTop 100

Sales, Appearance

Popular Life of the Album(Album’s Survival Time in the Charts)

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Back of 2003

2.Paper’s Research Idea

- Research Question & Outline- Research Approach- Results & Discussion

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Does the level of sharing influence Albums’ Survival time on the charts?

Research Question:

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Research Outline

Comparative Analysis Before and After Event Window 1

(Oct-1995 to Oct-2003).

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Assess the impact of recent market and technological developments on survival of music albums on the top 100 charts

Objective 1

Objective 2

Evaluate the specific impact of P2P sharing on album chart survival.

Phase 1

Impact of Sharing on Album Survival, during

Event Window 2 (Oct-2002- to Dec-2003).

Phase 2

Survival Model:• is a weekly stochastic process that governs

whether an album exits the charts.

Accelerated Failure Time Model (AFT):

Proportional Hazard Model (PH):

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Re

sear

ch A

pp

roac

h

• A survival model that assumes that the effect of a covariate is to multiply the hazard by some constant.

Alternative parametric model to PH:

• assumes that the effect of a covariate is to accelerate or decelerate the life course by some constant. =>Describes a situation where the biological or mechanical life history

of an event is accelerated.

Can be directly compared with OLS estimates.

Idea (Phase 1)

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Comparative Analysis Before and After Event Window 1

(Oct-1995 to Oct-2003).

Variables (Phase 1)

Label Definition Values

SurvivalNumber of weeks an album appears on Billboard top 100 chart

1-34 (weeks)

Debut RankThe rank at which an album debuts on Billboard top 100 chart

1-100 (rank)

Debut Post-TS Indicator Variable (Dummy) 0 (Pre-TS) /1 (Post-TS)

Album ReleasedNumber of albums released during each year of the study period (Control Variable)

1~N

Superstar Reputation of Artist (Dummy) 1/0

Minor Label Distributing Label (Dummy) 1/0

Solo Male Solo Male (Dummy) 1/0

Holiday_Debut_Album Holiday Effect (Dummy) 1/0

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Strategy (Estimation Models, Phase 1)

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AFT OLS

Results Virtually Identical

Process (Phase 1)

Estimation Equation

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Process (Phase 1)

Estimation Equation

Interaction Effect

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Process (Phase 1)

Estimation Equation

Interaction Effect

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Findings (Phase 1)

• Average survival time on the charts decreased by 42% in the post-TS period.

• Debut rank had a highly negative impact on album survival, more pronounced in the post-TS period for albums debuting lower on the charts (i.e., less popular albums).

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• Across both pre- and post-TS periods, albums promoted by major labels tended to survive longer than those promoted by minor labels.

=> However, minor label albums have experienced a significant beneficial shift in the post-TS period and are surviving longer than before.

• Albums by female artists continue to have a survival advantage over those by solo male artists and groups

Assess the impact of recent market and technological developments on survival of music albums on the top 100 charts

P2P Effect on Album Survival

Phase 2 (Idea)

❏ Data were collected from WinMX file sharing

platform.

❏ Albums appearing on the chart were randomly

sorted, on a daily basis

❏ The daily results were averaged to produce weekly

information on sharing for each album.

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Impact of Sharing on Album Survival, during

Event Window 2 (Oct-2002- to Dec-2003).

Variables

Label Definition Values

Share_debut Average number sharing level observed in the first four weeks 0- N

Share_MaxMaximum available copies of a file over a four week period or until the album drops off the charts

0- N

+ Variables used in Phase I.

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AFT OLS


Part I.

Phase 2 (Process)- can the drop in survival be attributable to file sharing?

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Estimation model

Estimation using RIAA Announcement as Instrument Variable

Suspect Omitted Variable

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Estimation model Estimation for Endogenous Variable


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AFT OLS


Part I. Part II.

OLS

Omitted Variable Issue

No equivalent methodology to 2SLS in

Hazard Models

Phase 2 (Process)- Is the 2003 Sample different ?

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Phase 2 (Process)- Was RIAA announcement a legal consideration?

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Phase 2 (Process)- Effect of sharing on survival

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Estimation w/Interaction Effect model

Evaluate the specific impact of P2P sharing on album chart survival.

Findings (Phase 2)

• Level of sharing has a negative impact for lower debut ranked albums.

• music label offering a less popular album might be hurt by negative word-of-mouth that can quickly chill demand.

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• Superstars and debut rank are important markers of success.

• Minor labels are closing the gap with the major labels.

Discussion

Sharing Measurement

When measuring the sharing, is it relevant to focus on Sharing Intensity or in Downloads?

Geographic Limitation

Measuring Sales in US, but collecting P2P shares (from worldwide users)? Was there any control on the location of the sharing?

IV -> RIAA

Since RRIA is promoting research to justify their sanction & regulatory actions, was the use of the RIAA Announcement as IV in the paper valid?

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New Ideas

New Sharing

Torrent, Search Engines ImprovementsHow about Streaming Spotify, Views in Youtube?Playlists?

New Business Models

New Business Models make new variables in success measurements.

New Areas Applications

Piracy IssuesDigital music, movies and business strategySocial Networks

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Is this study still applicable to today’s condition?

Thanks!Any questions?

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2007 , 1995 - 2003, 100, 2

the effect of digital sharing technologies on music markets : a survival analysis of albums on...

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