File sharing is taking its worst toll on smaller albums, “devastating” lower ranked titles on the Billboard Top 100, according to the Management Insights feature in the current issue of Management Science, the flagship journal of the Institute for Operations Research and the Management Sciences (INFORMS).
Management Insights, a regular feature of the journal, is a digest of important research in business, management, operations research, and management science. It appears in every issue of the monthly journal.
“The Effect of Digital Sharing Technologies on Music Markets: A Survival Analysis of Albums on Ranking Charts” is by Sudip Bhattacharjee and Ram D. Gopal, University of Connecticut; Kaveepan Lertwachara, California Polytechnic State University; James R. Marsden, University of Connecticut; and Rahul Telang, Carnegie Mellon University.
The authors completed rigorous empirical analysis, using data on the performance of music albums on the Billboard Top 100 charts together with data on peer-to-peer file sharing. The analysis indicates that average survival time on the chart has decreased by 42%. The lower debut ranked albums bore the brunt of decreased survival times, with file sharing as a major contributing factor.
“Although there is no evidence that file sharing hurt the top debuting albums, this electronic word-of-mouth was devastating for lower debuting albums, suggesting increased risk from rapid information sharing for all but the ‘cream of the crop,’” the authors write.
The authors note that strength of chart debut rank as a success indicator emphasizes the importance of early successful marketing efforts and suggests that firms would do well to frontload their promotional campaigns.
Another important marker of success continues to be the superstar effect, with albums by these artists surviving 35% longer.
The study also provides evidence that minor labels are closing the gap with the major labels.
The authors investigated how the level of file sharing influences survival time on the charts. The first research phase compares music album survival before and after the arrival of MP3, Napster, and the Digital Millennium Copyright Act. The second phase looks at the effect file sharing has on current top debut ranked albums and lower debut ranked albums.
The current issue of Management Insights is available at http://mansci.journal.informs.org/cgi/reprint/53/9/iv. The full papers associated with the Insights are available to Management Science subscribers. Individual papers can be purchased at http://institutions.informs.org. Additional issues of Management Insights can be accessed at http://mansci.pubs/informs/org .