PS3017 Music and Commerce

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Information about PS3017 Music and Commerce

Published on January 15, 2008

Author: Sigismondo


Music and Commerce:  Music and Commerce The music industry Music in retail and leisure The music industry:  The music industry Tin Pan Alley and musical innovation Superstardom Music purchasing Music piracy Radio programming Tin Pan Alley and innovation:  Tin Pan Alley and innovation Music industry not for the cultural / aesthetic benefit of musicians and their audience Royalties at 15% or less After the costs of recording, producing videos etc. Losses are carried over to royalties on future recordings CDs are cheaper to produce and have smaller shipping costs But Only 1 in 10 records make money Huge entry barriers of production, marketing, and distribution Leads to mergers and vertical integration e.g. record companies and movie studios allows cross-promotion Oligopoly - six companies held over 75% of UK market in 2001 Tin Pan Alley and innovation:  Tin Pan Alley and innovation Oligopolies mean less competition Production costs are constant so aim to sell large quantities of a small number of CDs Maximises returns on minimal outlay Negative correlation between music industry concentration and both innovation and diversity The more that a small number of companies control the charts (i.e. concentration) so the slower the turnover of songs on the charts (i.e. lack of diversity) and the fewer number of new artists there are that reach the charts (i.e. lack of innovation) 1980 = 9 firms with hit records in the U.S.A., and there were only 82 top 10 records and 17 number one records: 1975 = 21 firms with hit records, and there were 111 top 10 records (111) and 37 number one records Lack of diversity linked to lower overall sales Potential customers cannot identify music matching their taste Oligopolistic control is bad for music lovers Music industry structure affects sales and preferences Superstardom:  Superstardom Industry favours huge sales of small number of CDs Sales attract further marketing and promotion A star system: small roster of acts that sell in huge quantities The ‘superstar’ phenomenon Rising incomes means that demand for ‘quality’ goods rises Inferior goods are imperfect substitutes for slightly better ones Therefore small differences in talent lead to hugely magnified earnings differences A very small number of musicians enjoy disproportionate success By 2001 Elvis Presley had 27 USA platinum singles whereas Mariah Carey in second place had only 8, and the three artists tied for third place (Boyz II Men, Whitney Houston, and Michael Jackson) had only 7 each (Fox and Kochanowski, 2004) Of the 1377 performers who received a gold record in the USA between 1958 and 1989, only 149 performers (10.8%) accounted for 43.1% of all gold records awarded (Chung, 1994) Superstardom:  Superstardom Variation proposed by MacDonald (1988) Music industry is a multi-layered market Poorer musicians are ‘filtered out’ Entry-level market (e.g. pubs) involves lower income consumers: they have more time so can risk listening to a range of musicians Better musicians succeed and gain access to more select markets (e.g. admission fees) containing wealthier consumers with less time and less opportunity to risk listening to poor musicians Potentially small differences in talent lead to disproportionate financial reward The ‘filter’ is influenced by physical attractiveness, racism etc. USA charts 1955-1987 shows that the cost of being black is one hit album (Hamlen, 1994) Superstardom:  Superstardom Superstardom unrelated to talent (Adler, 1985) The more an individual knows about music so the more that he / she will enjoy listening to it Motivated to obtain ‘consumption capital’ through discussion with others Easier if people all know about the same small group of musicians We are motivated to be interested in well-known musicians as this minimises difficulties in obtaining consumption capital Theory outstrips research data Difficult to operationalise and measure ‘talent’ Relationship to experimental aesthetics? Music purchasing:  Music purchasing Research divides into three groups Music consumption and sales charts Pricing strategies On-line music purchasing Music purchasing:  Music purchasing Music consumption and sales charts Lacher (1989) Music consumption differs from that of other products in several ways Many opportunities to sample before buying (e.g. radio), rarely buy the same music twice, and consume the music repeatedly Purchasing of recorded music may require specialised theoretical explanations Lacher and Mizerski (1994) Music purchase decision affected by overall affective response, experiential response (e.g. being 'swept up' into the experience of the music), and the need to re-experience the music Need to re-experience was the strongest predictor of purchase Music purchasing:  Music purchasing Meenaghan and Turnbull (1981) and product life cycle Based on archival measures (e.g. radio airplay, record sales) Five stages in a typically 16 week-long period Stage 1 (‘pre-release’) Songs and artists selected for their likely market performance Stage 2 (‘buzz-creation’) Just before and during release. Promotion by the record company to persuade TV and radio stations that the song is not a risk Stage 3 (‘pre-threshold’) Between release and entry into the charts. Media decide whether to feature the song. Media airplay a crucial determinant of record sales Stage 4 (‘commercial life’) Time spent on the chart (approx. 11 weeks). During the early weeks, radio airplay is the most important determinant of sales. If a song reaches the Top 20 it tends to receive television coverage (which becomes more closely associated with sales) Stage 5 (‘final decline’) Falling sales. Very short. Sales often negligible within only 3 weeks of song leaving the chart Music purchasing:  Music purchasing Music sales charts predict future popularity and record sales Dixon (1982) Chart performance of singles and albums in the USA between September and December 1979 Chart entry position most powerful predictor of peak position and time on chart Strobl and Tucker (2000) Analysed the complete UK album charts for 1991 and 1992 Longevity of chart tenure influenced by initial popularity, seasonal demand (i.e. entering chart at Christmas), and type of album (e.g. greatest hits) Supported the ‘superstar’ theory: between 1980 and 1993 “a few albums have spent a long time period, while many have spent a very short time period in the charts” (p.121) North and Hargreaves (1995) Low to moderate (although significant) positive correlations between the performance of 200 artists on the UK and USA sales charts Space in music encyclopaedias = eminence: positively related to the number of years that had passed since a performer enjoyed their first number 1 single and the duration of their chart career Music purchasing:  Music purchasing Economic factors associated with chart performance Crain and Tollison (1997) All 912 songs that reached number 1 in the USA between 1940 and 1988 in terms of tempo, duration, and the number of weeks they spent at number 1 Compared against data on the economy (e.g. interest rates, personal income) and related variables (e.g. availability of substitutes such as television) Changes in the internal structure of successful songs were tied to market forces Music charts were dominated less by a small number of performers as there were more FM radio stations (and therefore presumably a greater range of music that was presented to listeners) and a faster growing teenage population (i.e. a greater number of consumers) Tempo of songs related positively to number of military deaths and ‘misery index’ (i.e. unemployment rate plus inflation rate) Length of songs negatively related to military deaths, prime interest rate, and advertising expenditure; and positively related to earnings and the dominance of a small number of artists in occupying the number 1 position Music purchasing:  Music purchasing Burke (1996) Quantified the link between the singles and albums chart 40% of songs which appeared in the annual British top 100 singles chart also appeared on albums in the top 100 albums in the same year (and typically in the same quarter) This percentage dropped considerably the year after and was close to 0 afterwards: “a particular tune has … a commercial life of about two years in the albums market” (p.147) Singles are usually produced at a loss to the record company: since success in the singles and albums charts tends to occur at the same time this implies that record companies are willing to sell singles at a loss because of an ‘advertising effect’ on album sales rather than because they were using singles as a means of testing the likely market for an album Music purchasing:  Music purchasing Pricing strategies Music not the focus but … Mixon, Trevino, and Bales (2004) ‘Just-below’ pricing strategies Used more in rap than classical music and more in-store than on-line They argue this supports the idea that just-below pricing aimed at younger and less educated consumers Coley and Burgess (2003) Men were more likely than women to impulse buy music CDs and DVDs Consistent with their general greater propensity toward impulse buying of technology and entertainment items Numerous studies of on-line CD retailing … On-line CD sales:  On-line CD sales Attitudes towards on-line CD purchasing Merrilees and Fry (2002) Attitudes towards online CD retailers determined by interactivity and trust (rather than e.g. navigability or fun) Customers are impatient Rajala and Hantula (2000) A delay of around 4 seconds in providing information about the availability of a CD in a particular on-line shop was sufficient to reduce participants’ inclination to shop on the same site in future or recommend it to a friend Delays over .5s led to reduced perceptions of service quality Johnson, Moe, Fader, Bellman, and Lohse (2004) Households visit only 1.3 CD sites a month 70% of the households visited only one site Recommendations Cooke, Sujan, Sujan, and Weitz (2002) Unfamiliar CDs presented in the context of CDs that were liked and familiar were regarded more positively When a short musical excerpt was provided also the unfamiliar CDs were liked less (because participants contrasted them with familiar CDs) Music piracy:  Music piracy Consequences as serious as suspected? Jones and Lenhart (2004) Two surveys of 4000+ participants between 2000 and 2001 21% and 29% of respondents had downloaded music 2003 report by market research agency Mintel noted that only 14% of British internet users also regularly downloaded music Napster’s perspective Use of their software increased music sales by allowing people the opportunity to sample music before buying What’s good for them is good for the music industry Navissi, Naiker, and Upson (2005) The money markets support Napster’s perspective Legal events that harmed the prospects of Napster also harmed the market value (by an average of 18%) of a sample of 41 music companies in the USA Positive legal news for Napster led to on average an 8.97% increase in the market value of the 41 companies Music piracy:  Music piracy But not all studies so positive Jones and Lenhart (2004) 79% of music downloaders got the music for free Only 13% of music downloaders regarded it as stealing Only 21% subsequently bought the music ‘most of the time’ Estimate that in summer 2000 there were 11 million users of Napster in the USA, sharing approximately 1.5 billion songs Teston (2002) 52% of his sample of 264 seventh-grade school pupils advocated piracy (compared to only 10% for bike theft) 72% had actually engaged in digital music piracy Walsh, Mitchell, Frenzel, and Wiedmann (2003) 37% of 4000 German internet users contacted during 2001 regularly downloaded music from the internet Hui and Png (2003) Analysed international music CD sales from 1994 to 1998 Demand for CDs decreased as piracy increased Estimate that piracy led to a 6.6% reduction in sales in 1998 (although this is only 42% of that claimed by the music industry) Music piracy:  Music piracy Why pirate music? Sex and income Jones and Lenhart (2004) Downloaders were disproportionately male, and more experienced internet users from lower income and educational groups Odell, Korgen, Schumacher, and Delucchi (2000) 49.6% of North American university-aged males downloaded music compared to only 26.9% of females Papadopoulos (2003; 2004) Levels of music piracy positively related to the legitimate price of a CD as a function of wages Ang, Cheng, Lim, and Tambyah (2001) Low income males in Singapore were more favourable  Music piracy:  Music piracy Individuals’ value systems Three studies show the importance of ethical and moral concerns, the role of friends, and the desire to save money Gopal, Sanders, Bhattacharjee, Agrawal, and Wagner (2004) Music piracy linked to ethical / moral concerns, value placed on justice, perception of money saved, and the size of the piracy network e.g. ethical concerns related negatively to the size of the piracy network which was in turn related positively to perceptions of the amount of money saved through music piracy Chiou, Huang, and Lee (2005) Music piracy negatively linked to satisfaction with copyrighted CDs currently owned, idolisation of favourite musicians, perceived prosecution risk, perceived magnitude of consequence for the musicians / record companies, and perceived social consensus concerning the immorality of piracy Ang, Cheng, Lim, and Tambyah (2001) Counterfeit purchasers had more trust in the shops that sold them and regarded the purchase as less risky Attitudes toward piracy were related positively to value consciousness (i.e. a desire to pay low prices), and negatively to a measure of ethical concern and ‘normative susceptibility’ (a desire to impress others) Music piracy:  Music piracy Two studies attempt to cluster reasons for piracy North and Oishi (in press) Why choose to pirate rather than buy? Reasons for buying grouped into four factors concerning the consequences of friendship, need to control and be involved with the music, music industry promotion, and need to re-experience the music British scored higher than Japanese counterparts on first and last Links to personality e.g. ‘re-experience the music’ related negatively to experience seeking: participants who buy (rather than pirate) CDs in order to re-experience the music tend more generally to avoid new experiences Music piracy:  Music piracy Walsh, Mitchell, Frenzel, and Wiedmann (2003) Four motive clusters for paying for internet downloads among 4000 German internet users - assortment and time advantage (e.g. easy access to unreleased or otherwise unavailable songs), independence (i.e. freedom from the constraints of the music industry such as store opening hours), trend consciousness (i.e. belief that the internet is fashionable and that existing music suppliers are not), and topicality (i.e. access to up to date music) Three groups of downloaders - ‘Demanding downloaders’ scored high on all four motive clusters. ‘General download approvers’ had the lowest scores on the motive clusters, particularly ‘independence’. ‘Procurement autonomous’ downloaders also had low scores on all the motive clusters except independence Complex motives underlie music piracy Personality (as well as cost) plays a role so … Cheap CDs and legal on-line music sites will not prevent piracy Web sites must allow for different types of customers Radio programming:  Radio programming The final stage in the music industry’s pre-selection of music on behalf of the public Records that don’t get airplay cannot become hits so radio is very important But radio industry does not love music Music attracts a segment of the population for advertisers They only play music as it’s the cheapest format (relative to e.g. rolling news) Further profit through conglomeration which allows programme syndication and ‘voice tracking’ Attracts a particular segment through a format Different stations in the same area will adopt different formats A new station may copy a format already run successfully by an existing station in the area providing the audience is sufficiently large / potentially profitable Radio programming:  Radio programming Use of music to attract advertising revenue leads to conservative music policy Don’t aim to play music listeners like but instead to avoid songs listeners might not like: familiar and least objectionable songs Record companies ensure airplay by producing material that fits into radio station formats Playlist selection emphasises tried and trusted methods, e.g. experience of station employees and record company promoters, emphasis on superstars, and imitation of competing stations Hendy (2000) During 1996, one in four songs played on BBC Radio 1 was ‘pre-release’ Corresponding figures for Atlantic 252 and Virgin were one in 67 and one in 19 Radio programming:  Radio programming Ahlkvist and Faulkner (2002) Staff at 28 stations in the USA highlighted four ways of selecting songs for airplay The ‘subjective repertoire’ Decisions based on the programmer’s own aesthetic evaluation of the songs and artists e.g. passion for music The ‘objective repertoire’ Decisions based on market research, a conservative approach toward ‘breaking’ new songs, and attempts to operate autonomously of record company marketing The ‘populist repertoire’ Decisions involve trying to evaluate potential songs ‘like a listener’, using criteria they believe the listeners’ use The ‘synergistic repertoire’ Decisions influenced by collaboration with record companies e.g. playing a particular song in return for exclusive interview Ahlkvist and Fisher (2000) The subjective approach protects against standardization of musical output: the research-based objective approach leads to standardization Music industry conclusions:  Music industry conclusions Divorce between the music industry and music psychology Former supersedes research on the latter: the opinions of a small number of individuals within the music industry dictate what music people will like Good long-term prospects for psychological research Interactivity of the internet and digital broadcasting effectively short circuit the pre-selection processes of the music industry A considerable psychological literature addresses specifically who should like what music: this could inform radio programming decisions, and explain music purchasing Music in retail and leisure:  Music in retail and leisure Implications of a scientific approach Main areas of research Recent Leicester research Conclusions Conflicting attitudes to commercial music:  Conflicting attitudes to commercial music London’s well-known musical duo Chaz and Dave promised in their manifesto for the city’s mayoral election that they would ban piped music in pubs. This was despite another of their manifesto promises that legislation concerning busking would be loosened! In May 2000, golfers in Stuart, Florida were in conflict with neighbouring pig farmer, Paul Thompson: The dispute centred over the country music Thompson played to his pigs which could also be heard from the 15th hole. (Thompson plays the music since he claims it “reduces stress, enhances tenderness of the meat, lets the animal grow faster and fatten quicker”.) In France, piped music is causing controversy because it is being introduced into some newly pedestrianised streets. The US military apparently used cover versions of middle of the road pop songs to break the fighting spirit of the Viet Cong. The Glastonbury pop music festival which takes place in the south-west of England has long been well-known for it’s primitive washing facilities and promotion of counter-culture attitudes: In recent years however it has begun to feature piped music in it’s toilets. Many of course would say that this is precisely where piped music belongs. An American man recently sued a bus company successfully over the piped music played on board. Apparently he saw no reason why he should have to listen to music he didn’t order, and eventually had his argument upheld by the USA Supreme Court: His right to the freedom of assembly had been violated, contravening the first amendment to the US constitution. Implications of a scientific approach:  Implications of a scientific approach Commercial benefits of music: is the case proven? Market research and controlled experimentation Testing theory in the real world Verbal and behavioural measures Pilot studies: non-obvious results Main areas of research:  Main areas of research Customer activity Purchasing and fit Waiting time Customer activity:  Customer activity Increases with the arousing qualities of in-store music Milliman (1986) 1392 groups of customers over 8 weekends Time to eat: slow music = 56 minutes, fast music = 45 minutes Drink per group: slow music = $30.47, fast music = $21.62 Gross profit per group: slow music = $55.82, fast music = $48.62 Milliman (1982). Slow music slows supermarket shopping by 15% and we spend 33% more Roballey et al (1985). Bites per minute fast music = 4.40, slow music = 3.83 McElrea and Standing (1992). Fast music causes fast drinking 9.70 minutes vs. 13.52 minutes Smith and Curnow (1966) and supermarket volume fast music = 17.64 minutes, slow music = 18.53 minutes Musical arousal vs. spending trade-off Purchasing and fit:  Purchasing and fit Musical fit Areni and Kim (1993) Classical music and top 40 music in a wine cellar Classical music leads to more expensive wine being bought Alpert and Alpert (1990) Music affects purchase intentions for greetings cards More later but … Asda’s chickens Waiting time:  Waiting time Ramos (1993) and Stratton (1992) Influences stress and time prepared to wait Why does it work? Time flies when you’re having fun? No it doesn’t Time perception increases with information encoded Pollyanna principle means pleasant information is recorded and recalled more efficiently Disliked music is not recorded and recalled efficiently and so less information encoded Liked music is recorded and recalled efficiently and so more information encoded Trade-off between liking and time perception Recent Leicester research:  Recent Leicester research Visiting:  Visiting Advice stall on welfare issues Complexity, style, and silence Verbal measures of likelihood of visiting Behavioural measures of visiting What people do and say differs Positive and negative effects of music ‘right’ music better than none ‘wrong’ music worse than none Store image and purchasing:  Store image and purchasing Four days in a coffee bar Pop, classical, easy listening, no music Expected effects on image Pop = upbeat; classical = sophisticated, easy listening = downmarket, no music = mixture Effects on purchase intentions List of 14 items on sale (e.g. slice of pizza) “How much would you be prepared to pay?” Slide36:  Silence Easy listening Pop Classical £14.30 £14.51 £16.61 £17.23 Spending in restaurants:  Spending in restaurants Classical, pop, no music over 18 nights Measure spending on all items Controlling for amount of time spent in restaurant Classical music led to overall higher spending per head Particularly on ‘luxury items’ Starters: classical = £4.92, pop = £4.04, no music = £3.93 Coffee: classical = £1.07, pop = £0.80, no music = £.054 Also on total food spend and overall spend Total food: classical = £24.13, pop = £21.91, no music = £21.70 Overall spend: classical = £32.52, pop = £29.46, no music = £29.73 Product choice:  Product choice Aisle-end wine display French and German wines matched for price and ‘dryness’ French and German music on alternate days French music = 5:1 German music = 2:1 Overall = 3:1 Customer questionnaire “Did the music influence the type of wine you bought?” Only 6 out of 44 said ‘yes’ Were they aware of ‘fit’? Only works when customers are uncertain Renaults versus Volkswagens Music on-hold:  Music on-hold Newspaper advert £5 for questionnaire on attitudes Beatles originals, pan pipe covers, spoken message Phone not answered Waiting time measured Beatles = 229.50s, covers = 257.28s, message = 197.76s Phone back Correlation between perception of music and image of phone service (upbeat, upmarket, aggressive, elegant, peaceful) Funding from PRS / PPL Music and image in a bar, a shop and a bank:  Music and image in a bar, a shop and a bank Classical, easy listening, and no music in city centre bar Style of music and image of bar Three dimensions Aggressive, upbeat, sophisticated Two sports retailers in Leicester Jazz and pop played ‘Image’ moved with the music Can differentiate otherwise similar shops Same three dimensions as the bar study Same three dimensions in a bank using classical and pop music Funding from PRS / PPL Music and workplace morale:  Music and workplace morale Liked, neutral music, no music Assembly area at ICL Stevenage Positive effect on morale “would rather swim with sharks” than hear even neutral music Funding from PRS / PPL Workplace productivity:  Workplace productivity Does fast music increase productivity on a mundane task? 72 staff in NatWest Bank cheque processing centre in Shepshed, UK Three conditions nominated by staff Fast music, slow music, no music Played over three weeks Mean number of cheques processed within each half hour Fast music = 23390.51 Slow music = 19129.17 No music = 20784.53 Fast music led to 22.3% more cheques being processed than did slow music and to 12.5% more cheques being processed than did no music Funding from PRS Attitude towards the ad:  Attitude towards the ad Traditional view was to influence brand beliefs I.e. favourable consequences of consuming Purchasing also influenced by emotional consequences of the ad Gorn (1982) 79% chose product linked to ‘liked’ music Works when people don’t pay attention to the ad Works for non-musical stimuli (e.g. visuals) Problems with classical conditioning:  Problems with classical conditioning Basically works, but … Difficult to replicate Allen and Madden’s (1985) funny stories and Pitt and Abratt’s (1988) red and blue condoms Demand artefacts Kellaris and Cox (1989) asked people to imagine liked and disliked music to the same effect Music affects beliefs as well as attitudes ‘Drinking a natural drink’ was linked to apple juice when advertised with music (23%) but not when no music was used (4%) Elaboration likelihood, involvement and fit:  Elaboration likelihood, involvement and fit The ELM – central and peripheral routes to persuasion Peripheral route. EL is low – you do not consider messages Central route. EL is high – you consider the messages Musical ‘fit’ helps for high involvement It activates relevant beliefs and knowledge Musical fit in radio advertising:  Musical fit in radio advertising Does musical fit aid product recall? Should raise salience Adverts prepared for five brands Same copy but fit, no fit, or no music Recall type of product (e.g. bank), brand (e.g. JP Morgan), or advert claims (e.g. on-line banking) Recall of product Funding from Capital Radio Music in TV adverts:  Music in TV adverts A sensual advert for Cadbury’s Flake Played with either new age or military music New age ‘fitted’ better and led to higher purchase intentions Conclusions:  Conclusions Practical implications:  Practical implications The case is not proven Initial positive signs Research-practitioner collaborations Trade-offs liking for store vs. time spent Music has many potential uses no single ‘right’ type of music music, listener and situation interact Further re search issues which influence likelihood of employing music customers’ awareness of music replication studies to refine and extend existing findings Theoretical implications :  Theoretical implications Underlying motivational principles may govern the effects psychobiology category activation Psychobiology effects of music on human nervous system (e.g. Berlyne) louder, faster more complex music is more arousing can explain customer activity Category activation music activates wider knowledge of the world (e.g. Martindale) can explain musical fit effects Theoretical implications:  Theoretical implications Theoretical development has been sacrificed somewhat to practical applicability but the former allows generalisation to a range of business settings Other theoretical approaches theories of musical behaviour theories of consumer behaviour ironic since both have employed arousal and knowledge activation Do existing studies really demonstrate psychobiolgical and knowledge activation processes specifically psychobiological (e.g. pulse rate) and knowledge activation (e.g. reaction time) measures are rarely taken Research should be less domain specific and draw on wider theories guidance as to which studies are likely to be successful (since not ‘re-inventing the wheel’) Since psychological and knowledge activation processes are so fundamental, music might influence many other consumer processes The End:  The End Some other things:  Some other things ABRSM:  ABRSM 1.5 million examination results from music grade exams Several effects Problems in assessment vs variations in candidate ability Non-experimental design means we can only speculate on the causes of the effects Vocal and percussion marks higher , piano marks lower Scotland marks higher, but lower SD Marks at grades 6-8 higher than grades 1-5, but higher SD No effect of examiner instrument specialism match / no-match on marks Examiners of intermediate length of service award lower, and SD of marks increases with length of service Marks decrease with candidate age Interaction between examiner and candidate sex Opposite sex candidates favoured Playing a sex appropriate instrument helped males but not females Difference between best and worst case scenarios was 21 marks I.e. fail vs distinction

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