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

The Internet has enabled the era of user-generated content, potentially breaking thehegemony of traditional content generators as the primary sources of acirc;not;Slegitimateacirc;not;? information.Prime examples of user-generated content are blogs and social networking sites, which allow easypublishing of and access to information. In this study, we examine the usefulness of such content,consisting of data from blogs and social networking sites in predicting sales in the music industry.We track the changes in online chatter for a sample of 108 albums for four weeks before and aftertheir release dates. We use linear and nonlinear regression to identify the relative significance ofonline variables on their observation date in predicting future album unit sales two weeks aheadOur findings are as follows: (a) the volume of blog posts about an album is positively correlatedwith future sales, (b) greater increases in an artistacirc;not;quot;s Myspace friends week over week have aweaker correlation to higher future sales, (c) traditional factors are still relevant acirc;not; albums releasedby major labels and albums with a number of reviews from mainstream sources like Rolling Stonealso tended to have higher future sales. More generally, the study provides some preliminaryanswers for marketing managers interested in assessing the relative importance of the burgeoningnumber of acirc;not;SWeb 2.0acirc;not;? information metrics that are becoming available on the Internet, and howlooking at interactions among them could provide predictive value beyond viewing them inisolation. The study also provides a framework for thinking about when user-generated contentinfluences decision making