On the Road Again: Concerts and the Digitization of Recorded Music
Over the last thirty years, the music industry has changed remarkably. Digitization has affected remuneration models, from sales of physical albums to online piracy and resulting in usage-based royalty income from streaming services. In this paper, we show that this is consistent with developments in the business models of recorded music. We quantify the relationship between artist income and concerts by studying the impact of live performances on demand for recorded music. Data from the online music service last.fm allows us to track individual-level listening and concert-going behavior. Canceled concerts provide a quasi-experimental setting to study the causal impact of exposure to live performances on attendees' listening behavior. We show that concerts lead to 23 % more plays at the extensive margin and 34 % more plays at the intensive margin. We translate this into recorded music income as of before and during the era of online piracy, and after the arrival of music streaming services. We estimate that without the effects on income from recorded music, artists would play 1--2 more concerts per year, which explains both the magnitude of increase during the piracy era, as well as the magnitude of decrease during the streaming era.