Digital music streaming services and the impact of ranking charts on music consumption.

Abstract

A list of top selling products provides useful information for consumers and affects their decision-making process. Recently, more and more digital platforms are adopting real-time ranking systems, which significantly influence consumers’ decision-making process. However, the effects of rank information on product consumption remain unclear in platforms employing flat-rate subscription pricing model where users can consume new products with zero marginal cost. This study examines the impact of the hourly top 100 ranking charts on product consumption in the context of a flat-rate subscription-based music streaming platform. A novel part of this analysis is the estimation of differential effects between first consumption and repeat consumption. Using rich streaming consumption data spanning over a period of one month at a large digital music streaming platform, this paper not only finds that ranking charts exert impact on both first consumption and repeat consumption but also discovers that streaming from first consumption, especially of songs by minor labels and underdog artists, is much more sensitive to ranking information as compared to that of repeat consumption.