The Dynamic Interplay between Recorded Music and Live Concerts: The Role of Piracy, Unbundling and Artist Characteristics

Dominik Papies and Harald J. van Heerde
Article Snapshot
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Key Takeaways

What? The recorded music industry is under threat due to piracy and the unbundling of albums, but concerts have become a major source of income for many music artists.

So What? Recorded music stimulates concerts more than the other way around.

Now What? Fame is a double-edged sword: it enhances the effect of recorded music demand on concert demand, but weakens the reverse effect.

​Article Snapshot: Executive Summaries from the Journal of Marketing

For music artists, concerts and recorded music stimulate each other, but the effect is asymmetric and it depends on technological advancements and artist characteristics.


Piracy and unbundling weaken the effect of concert demand on record demand, as these developments allow consumers to substitute the full product (whole album) by a free alternative (piracy) or less costly alternative (parts of the unbundled album).

We also find that an artist’s fame is a double-edged sword. A more famous artist enjoys a stronger effect of record demand on concert demand but faces a relatively weak effect of concerts on record demand.


Research Question

Despite the fundamental importance of recorded music and live concerts for the multi-billion music industry, no prior research has studied their dynamic interplay. This study fills this void by developing new theory on how piracy, unbundling and an artist’s fame and music quality shape the effect of record demand and concert demand and vice versa.

Methods

The theory is tested based on a unique dataset covering weekly concert and recorded music revenues for close to 400 artists across more than six years in the world’s third largest music market, Germany. Based on these data, we estimate an econometric model that assesses how the dynamic cross-format elasticities between record revenue and concert ticket revenue are moderated by technological developments and artist characteristics.

Findings

The success spiral for the music industry is asymmetric, with a much stronger effect of record demand on concert demand than vice versa. Piracy and unbundling weaken the effect of concert demand on record demand, allowing consumers to substitute the full product (whole album) by a free alternative (piracy) or less costly alternative (parts of the unbundled album). An artist’s fame is a double-edged sword. A more famous artist enjoys a stronger effect of record demand on concert demand but faces a weaker effect of concerts on record demand. Finally, music quality enhances the impact of concerts.

Implications

Despite the importance of records and concerts for consumers and for the multi-billion music industry, this is the first research into their dynamic interplay. A key insight is that artists across the spectrum should have a strong interest in giving concerts. For famous artists, concerts represent a core format to reap what has been sowed through selling records and producing hits. For less famous artists, concerts represent a seed that can be harvested through selling records. Music labels, especially for famous artists, should intensify their attempts to benefit from concert revenues.

Questions for the Classroom

  • What is a dual-format market and what is a cross-buy?

  • Explain how fame can be a double-edged sword for the dynamic interplay between concert and record demand.

  • Given the findings of this research, what should music artists change?


Article Citation: Dominik Papies and Harald J. van Heerde (2017) The Dynamic Interplay Between Recorded Music and Live Concerts: The Role of Piracy, Unbundling, and Artist Characteristics. Journal of Marketing: July 2017, Vol. 81, No. 4, pp. 67-87.

doi: http://dx.doi.org/10.1509/jm.14.0473



Author Bio:

 
Dominik Papies and Harald J. van Heerde
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