User-generated content (UGC) platforms provide consumers with access to content that is uploaded by users who do not hold the copyright to this content, and these platforms are not liable for restricting users from uploading the content due to “safe harbor” provisions. On many UGC video streaming platforms (e.g., YouTube) music is among the most popular content, raising the question of whether UGC platforms are beneficial for rights holders in the music industry (e.g., music labels and artists). On the one hand, UGC platforms pay fees to rights holders and may divert consumers from illegal piracy sites. On the other hand, these fees are only a fraction of what subscription-based audio streaming services (e.g., Spotify) pay, and UGC platforms may hinder the adoption of these services and displace paid downloads. Despite the ongoing controversial public debate, the relevance and magnitude of these effects have not been studied. To analyze how UGC video music streaming impacts (1) music consumption in other channels and (2) the total recorded music revenue, we compile a dataset covering music consumption via all major channels for 790 songs over a period of more than two years. We investigate these relationships using a simultaneous equation system and find that although UGC video streaming services generate income and reduce piracy, their effect on total revenues is negative because of the cannibalization of paid downloads and audio streaming channels.
Dominik Papies is a Professor of Marketing at the School of Business and Economics at the University of Tübingen. His substantive research interests focus on how digitization and new technology affect markets and business models. In the methodological domain, Dominik Papies studies the boundaries of established and the potential of new methods of addressing endogeneity in market response models. His research has been published in the top-tier journals of the field (e.g., Journal of Marketing, Marketing Science. His work has been funded, among other, by the German Research Foundation (DFG).