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The Dynamics of Product Differentiation in the British Record Industry

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  • Andrew E. Burke

Abstract

The paper conducts a statistical analysis of the dynamics of new music (product differentiation innovation) in the record industry. In pursuing this goal the paper generates new data and analyses a previously unutilized data set. The paper finds that there is a strong correlation between new music innovation in the audio singles and albums market. This is found to be mainly concurrent in the same quarter and to have a reasonably short product life. The paper discovers that these features also characterise the dynamics of record company performance. The research indicates that record companies are willing to sell singles at a loss due to advertising rather than learning externalities. At the industry level, the paper finds that new music innovation does not affect market size significantly and mainly causes the transfer of sales between record companies, with exceptional cases of multiplier effects.

Suggested Citation

  • Andrew E. Burke, 1995. "The Dynamics of Product Differentiation in the British Record Industry," Economics Technical Papers 951, Trinity College Dublin, Department of Economics.
  • Handle: RePEc:tcd:tcduet:951
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    References listed on IDEAS

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    1. Osborn, Denise R, et al, 1988. "Seasonality and the Order of Integration for Consumption," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 50(4), pages 361-377, November.
    2. Osborn, Denise R., 1990. "A survey of seasonality in UK macroeconomic variables," International Journal of Forecasting, Elsevier, vol. 6(3), pages 327-336, October.
    3. Davidson, James E H, et al, 1978. "Econometric Modelling of the Aggregate Time-Series Relationship between Consumers' Expenditure and Income in the United Kingdom," Economic Journal, Royal Economic Society, vol. 88(352), pages 661-692, December.
    4. Johansen, Søren & Juselius, Katarina, 1992. "Testing structural hypotheses in a multivariate cointegration analysis of the PPP and the UIP for UK," Journal of Econometrics, Elsevier, vol. 53(1-3), pages 211-244.
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    Citations

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    Cited by:

    1. David Giles, 2007. "Increasing returns to information in the US popular music industry," Applied Economics Letters, Taylor & Francis Journals, vol. 14(5), pages 327-331.
    2. David Giles, 2007. "Survival of the hippest: life at the top of the hot 100," Applied Economics, Taylor & Francis Journals, vol. 39(15), pages 1877-1887.
    3. Jonathan Gander & Alison Rieple, 2004. "How Relevant is Transaction Cost Economics to Inter-Firm Relationships in the Music Industry?," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 28(1), pages 57-79, February.
    4. Mark Lorenzen & Lars Frederiksen, 2005. "On the Economics of Innovation Projects Product Experimentation in the Music Industry," DRUID Working Papers 05-23, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    5. Andrew Burke, 1996. "How effective are international copyright conventions in the music industry?," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 20(1), pages 51-66, March.
    6. Eric Strobl & Clive Tucker, 2000. "The Dynamics of Chart Success in the U.K. Pre-Recorded Popular Music Industry," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 24(2), pages 113-134, May.
    7. Andrea Ordanini, 2006. "Selection models in the music industry: How a prior independent experience may affect chart success," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 30(3), pages 183-200, December.
    8. Marc Bourreau & Michel Gensollen & François Moreau & Patrick Waelbroeck, 2013. "“Selling less of more?” The impact of digitization on record companies," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 37(3), pages 327-346, August.
    9. Harrie Hansman & Clara Mulder & René Verhoeff, 1999. "The Adoption of the Compact Disk Player: An Event History Analysis for the Netherlands," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 23(3), pages 221-232, August.
    10. Samuel Cameron, 2016. "Past, present and future: music economics at the crossroads," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 40(1), pages 1-12, February.

    More about this item

    JEL classification:

    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
    • L30 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - General
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups

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