IDEAS home Printed from https://ideas.repec.org/p/ipt/decwpa/2014-09.html
   My bibliography  Save this paper

Search Costs, Information Exchange and Sales Concentration in the Digital Music Industry

Author

Abstract

It is often assumed that consumers benefit from the internet because it offers a “long tail” with more variety of products to choose from. However, search costs may block the long tail effect and result in the dominance of superstars. This paper examines the variety hypothesis in the entire online market for digital music downloads in 17 countries over the period 2006-2011. First, we show that the entire distribution of legal music downloads is heavily skewed. Second, we hypothesise that a wide range of online information channels (sales and discovery platforms) play a role in this market. We find that the reduction of search costs implied by the generalisation of online information tools transforms demand as a result of changes in the dispersion of preferences. Ubiquitous and very popular discovery channels such as Facebook and iTunes tend to push consumers towards the superstars by shifting the demand curve but also towards the long-tail since they also generate rotations that promote niches. Conssequently, both the superstar and the long tail effects emerge even in mature digital markets.

Suggested Citation

  • Nestor Duch-Brown & Bertin Martens, 2014. "Search Costs, Information Exchange and Sales Concentration in the Digital Music Industry," JRC Working Papers on Digital Economy 2014-09, Joint Research Centre (Seville site).
  • Handle: RePEc:ipt:decwpa:2014-09
    as

    Download full text from publisher

    File URL: https://ec.europa.eu/jrc/en/publication/eur-scientific-and-technical-research-reports/search-costs-information-exchange-and-sales-concentration-digital-music-industry
    Download Restriction: no

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jie Bai & Maggie Chen & Daniel Xu, 2018. "Search and Information Frictions on Global E-Commerce Platforms: Evidence from Aliexpress," Working Papers 18-17, NET Institute.

    More about this item

    Keywords

    digital markets; search costs; information; sales concentration; online markets;

    JEL classification:

    • C46 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Specific Distributions
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ipt:decwpa:2014-09. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Publication Officer). General contact details of provider: http://edirc.repec.org/data/ipjrces.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.