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Superstars and the long tail: The impact of technology on market structure in media industries

  • Weeds, Helen

Technological change has transformed creative media industries. Digitization lowers the costs of recording, storage, reproduction and distribution, while computer-based editing facilitates quality enhancement and special effects. Digital technology has altered the distribution of sales in ways that remain poorly understood: while some commentators have highlighted the growth of the “long tail”, others find digitization has raised the importance of “superstars”. This paper develops a theoretical model of differentiated goods with endogenous quality to investigate the impact of digitization on the distribution of firms. It finds that supply-side factors can generate superstars and long tail outcomes, and that coexistence of both phenomena can be explained by either a fall in fixed costs for basic products or a decline in market size.

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Article provided by Elsevier in its journal Information Economics and Policy.

Volume (Year): 24 (2012)
Issue (Month): 1 ()
Pages: 60-68

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Handle: RePEc:eee:iepoli:v:24:y:2012:i:1:p:60-68
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505549

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  1. Peitz, Martin & Valletti, Tommaso M., 2008. "Content and advertising in the media: Pay-tv versus free-to-air," International Journal of Industrial Organization, Elsevier, vol. 26(4), pages 949-965, July.
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  7. Rosen, Sherwin, 1981. "The Economics of Superstars," American Economic Review, American Economic Association, vol. 71(5), pages 845-58, December.
  8. Jonathan Vogel, 2008. "Spatial Competition with Heterogeneous Firms," Journal of Political Economy, University of Chicago Press, vol. 116(3), pages 423-466, 06.
  9. Erik Brynjolfsson & Yu (Jeffrey) Hu & Duncan Simester, 2011. "Goodbye Pareto Principle, Hello Long Tail: The Effect of Search Costs on the Concentration of Product Sales," Management Science, INFORMS, vol. 57(8), pages 1373-1386, August.
  10. V. Bhaskar & Ted To, 2004. "Is Perfect Price Discrimination Really Efficient? An Analysis of Free Entry," RAND Journal of Economics, The RAND Corporation, vol. 35(4), pages 762-776, Winter.
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  12. Catherine Tucker & Juanjuan Zhang, 2011. "How Does Popularity Information Affect Choices? A Field Experiment," Management Science, INFORMS, vol. 57(5), pages 828-842, May.
  13. Daniel Fleder & Kartik Hosanagar, 2009. "Blockbuster Culture's Next Rise or Fall: The Impact of Recommender Systems on Sales Diversity," Management Science, INFORMS, vol. 55(5), pages 697-712, May.
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  15. von Ungern-Sternberg, Thomas, 1991. "Monopolistic Competition on the Pyramid," Journal of Industrial Economics, Wiley Blackwell, vol. 39(4), pages 355-68, June.
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