Whatever Happened to Payola? An Empirical Analysis of Online Music Sharing

Decision Support Systems, 2004

Posted: 16 Aug 2005

See all articles by Sudip Bhattacharjee

Sudip Bhattacharjee

University of Connecticut - Department of Operations & Information Management; US Census Bureau

Ram D. Gopal

University of Connecticut - Department of Operations & Information Management

Kaveepan Lertwachara

University of Connecticut - Department of Operations & Information Management

James R. Marsden

University of Connecticut - Department of Operations & Information Management

Abstract

The popularity of online music-sharing networks has attracted interest from the music industry, artists, consumer advocacy groups, the popular press, and government legislative and regulatory entities. P2P networks have become lightning rods for debates on intellectual property rights and music market fates. Yet, to date, little has been based on actual observed activity on online sharing networks. Here, we report on an initial P2P network data-gathering and analysis endeavor and relate it to market performance of music albums. The relative market performance of music albums is gauged using the list of top 100 albums on the weekly Billboard charts. The P2P sharing data gathered is longitudinal, spanning a period of eight weeks. We also identify and track data for 47 upcoming album releases providing pre- and post-release comparisons of sharing activity.

We offer four main findings:

1) significant piracy opportunity and activity were observed;

2) the level of sharing opportunities are related to albums' relative chart positions;

3) there is evidence of both pre-purchase sampling piracy and lost-sales piracy; and,

4) sharing activity levels provide leading indicators of direction of movement of albums on the Billboard charts.

Points (3) and (4) have particular implications for music marketing and promotion.

Keywords: Online Consumer Behavior, Music Industry, Sampling, Piracy, Advertising, Entertainment Marketing, Internet Marketing

JEL Classification: C15, D83, L15, L82, 033, Z1

Suggested Citation

Bhattacharjee, Sudip and Gopal, Ram D. and Lertwachara, Kaveepan and Marsden, James R., Whatever Happened to Payola? An Empirical Analysis of Online Music Sharing. Decision Support Systems, 2004, Available at SSRN: https://ssrn.com/abstract=772789

Sudip Bhattacharjee

University of Connecticut - Department of Operations & Information Management ( email )

2100 Hillside Road, U-1041
Storrs, CT 06269-1041
United States

HOME PAGE: http://users.business.uconn.edu/sbhattacharjee

US Census Bureau ( email )

4600 Silver Hill Road
D.C., WA 20233
United States

Ram D. Gopal

University of Connecticut - Department of Operations & Information Management ( email )

368 Fairfield Road
Storrs, CT 06269-2041
United States

Kaveepan Lertwachara

University of Connecticut - Department of Operations & Information Management ( email )

368 Fairfield Road
Storrs, CT 06269-2041
United States

James R. Marsden (Contact Author)

University of Connecticut - Department of Operations & Information Management ( email )

368 Fairfield Road
Storrs, CT 06269-2041
United States

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