Streaming Stimulates the Live Concert Industry: Evidence from YouTube

The removal of Warner Music content from YouTube in the first three quarters of 2009 constitutes a plausible natural experiment to investigate the impact of streaming on live concert sales. This Warner-YouTube blackout had statistically and economically negative effects on Warner artists relative to non-Warner artists. Specifically, relative revenues and prices were lower and relative attendance was not higher. These effects were stronger among artists who recently had a song in the Billboard Hot 100 and among those who were more frequently searched on YouTube just prior to the blackout. These findings suggest that the diffusion of streaming has stimulated the demand for live concerts. The evidence is also consistent with a differentiated Bertrand model of ticket pricing in which prices are strategic complements and prices and streaming penetration gives rise to increasing differences in the artist profit function. This suggests that concerts and streaming are complements in demand for a given artist, and that concerts by different artists are substitutes. More broadly, the paper is an example of how the results from the monotone comparative statics literature can be adapted for use with difference-in-differences estimation.