Conversion in Music Streaming Services
How do music streaming services such as Spotify affect the willingness to pay for concerts
Our research supports the industry and especially nonsuperstar artists by pinpointing a way to maximize total revenues and even realize a surplus, potentially leaving every party better off.
The study just released by Prof. Dr. Rouven Seifert (Universität Rostock), Janis Denk (Universität Hamburg), Prof. Dr. Michel Clement (Universität Hamburg), Dr. Michael Kandziora (Universität Hamburg) and Dr. Janek Meyn (AIDAR) investigate the impact of music streaming conversions on other distribution channels.
We find that conversion in music subscriptions spills over to the live market and changes willingness to pay (WTP) and demand for live events. Conversion-induced spillovers are especially relevant in the current environment, as payouts from music streaming services are low for many artists and artists have even released albums as free giveaways to generate ticket sales.
Converting from no streaming or free streaming to a premium subscription leads to a particularly high surplus in WTP. Converting from no streaming or free streaming to a premium subscription leads to a particularly high surplus in WTP and demand for live music. Unsubscribing or downgrading a music subscription decreases WTP and demand for live events. However, changes in music subscriptions are rather unrelated to physical and digital purchases.
However, changes in music subscriptions are rather unrelated to physical and digital purchases, which might indicate that live music complements music subscription consumption, but physical and digital purchases are rather unaffected by music subscriptions and upgrades (serving distinct segments).
A scenario analysis indicates that deleting the free streaming option outperforms restricting the features available to free users.
Publication: Seifert, R., Denk, J., Clement, M., Kandziora, M., & Meyn, J. (2023). Conversion in Music Streaming Services. Journal of Interactive Marketing, 0(0).