Does Chatter Matter? The Impact of User-Generated Content on Music Sales

The Internet has enabled the era of user-generated content, potentiallybreaking the hegemony of traditional content generators as the primarysources of “legitimate” information. Prime examples ofuser-generated content are blogs and social networking sites, whichallow easy publishing of and access to information. In this study, weexamine the usefulness of such content, consisting of data from blogsand social networking sites in predicting sales in the music industry.We track the changes in online chatter for a sample of 108 albums forfour weeks before and after their release dates. We use linear andnonlinear regression to identify the relative significance of onlinevariables on their observation date in predicting future album unitsales two weeks ahead Our findings are as follows: (a) the volume ofblog posts about an album is positively correlated with future sales,(b) greater increases in an artist’s Myspace friends week overweek have a weaker correlation to higher future sales, (c) traditionalfactors are still relevant – albums released by major labels andalbums with a number of reviews from mainstream sources like RollingStone also tended to have higher future sales. More generally, the studyprovides some preliminary answers for marketing managers interested inassessing the relative importance of the burgeoning number of “Web2.0” information metrics that are becoming available on theInternet, and how looking at interactions among them could providepredictive value beyond viewing them in isolation. The study alsoprovides a framework for thinking about when user-generated contentinfluences decision making.