Youtube Decade: Cultural Convergence in Recorded Music

Abstract

The YouTube platform reduces fixed entry costs for local artists but also lowers the cost of access to international superstars. The net effect is an empirical question. We study the effect of YouTube on the market for music, focusing on converging tastes for international hits. We consider Austria and Germany, which share a common culture and technological development but differ in access to music videos on YouTube. Exploiting a contract dispute that has blocked official music videos in Germany since 2009, we find that YouTube increases the number of US hits on European charts. We further find evidence that YouTube speeds the hitmaking cycle and brings more unique titles to top charts. Although the superstar effect dominates, the magnitude of estimated effects are modest, suggesting that YouTube will not drive out the market for local music.

Keywords: Digitization, Cultural Trade, Music Videos

JEL Classification: L82, O33, D83