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Loudness War: How Record Labels Compete for Consumer Attention

2014; RELX Group (Netherlands); Linguagem: Inglês

10.2139/ssrn.2444708

1556-5068

Christian Essling, Johannes Koenen, Christian Peukert,

Digital Platforms and Economics

In markets with long tails and thousands of products, like recorded music, consumers cannot possibly be aware of every product. We analyze how record labels use single releases as a strategic instrument to attract consumer attention in a competitive environment. In particular, we study how the advent of digitization has changed firm strategy. In accordance with predictions from a simple theoretical model, we show that record labels release more singles with shorter intervals in between when facing greater competitive pressure. We show that this effect is stronger in the digital age. With individual songs becoming readily available (forced unbundling), the attention generation motive becomes predominant and single releases more closely resemble a form of advertising.