Superstars and genre artists: spillover effects in the recorded music industry

Abstract: The superstars of the recorded music industry are not only some of the most well- known and admired people in the world, they are the strategic backbone of the industry. Research has mostly focused its attention on stars in isolation, or as the key component of a risk-minimizing portfolio of artists. Lesser-known genre artists are often viewed in the literature as tools of diversification and customer segmentation, and there is only inconclusive suggestions regarding the way these types of artists interact. In this thesis we set out to expand the view on the interaction in sales patterns between star artists and genre artists. We introduce the term intra-genre spillover to denote the effect that we set out to discover. Intra-genre spillover effects refer to the potential effect that a star artist could have on the sales of other artists in the same genre. Using event study techniques we estimate the intra-genre spillover effect caused by star artists' hit singles on the Billboard Top 40. We run four regressions estimating coefficients for 21 weeks surrounding the event, controlling for artist and time fixed effects. We find a positive, and statistically significant effect on genre artists streaming volumes in the weeks when a star artist from the genre enters the Billboard Top 40. The majority of the effect seems to reverse in the following week, and further conclusions about the length of the effect are uncertain. Further, the effect seems to be evenly distributed among genre artists of different sizes. We conclude that the existence of an intra-genre spillover effect could have implications for both theory and practice. Theory could benefit from expanding its view on the interaction in sales patterns between star artists and lesser-known genre artists. Managers and other stakeholders in the recorded music industry could more actively explore ways to create synergies between star artists and their vast roster of less successful artists.