Did Modern Media Kill the Superstar?

Abstract: This thesis will examine the increased amount of information made available through modern media, and how this affects the diversity in consumption. The thesis will focus on how diversity in music consumption has evolved over the years. There are two contradicting theories that try to describe the impact modern media could have on consumption, the theory of the Long Tail and the Superstar effect. The Superstar effect states that people will reduce their search costs by consuming the same goods as everyone else, and that this will lead to a convergence of products available in the market. The theory of the Long Tail, on the other hand suggest that the increased information will reduce the uncertainty for products and lead to an increased variation in the market. This thesis aims to examine which of the theories that are best applied to the observed development of music consumption, and by doing so give empirical evidence for how the modern media markets are affecting consumer behaviour. The data in this study covers the historical performance of the Billboard chart The Hot 100. The chart reflects the most popular songs from the past week and has been produced since 1958. Further, the dataset was found to be a good fit in order to answer the research question. We find a strong indication in favour of the Superstar effect, and that the music industry is evolving into an industry where a few actors make up the lion-share of the market. The music industry has been defined as a frontrunner for the cultural industries. The observed results are therefore likely to be existing or evolving in the other entertainment industries as well.