THE INFLUENCE OF AWARDS ON THE DEMAND FOR RECORDED MUSIC

The role of expert opinion is well established in the cultural economics literature. It seems that the role of experts and critics are indeed multifaceted and inherent in the sole characteristics and nature of creative content. Essentially, critical reviews, expert opinions as well as awards serve as key informants to reduce consumers’ uncertainty. Even though literature on the role and effect of expert opinion has been researched on mostly in the field of cinema, studies related to awards are rather limited. There have even been fewer studies carried out to evaluate the effect of awards and prizes in the popular music industry. As such, this paper analyses the effect of music awards and nomination on subsequent chart performance using a dataset of music albums and singles that were nominated for awards between 2008 and 2013 in the United States. Furthermore it empirically investigates the impact of three different music awards on demand for music recordings. This study distinguishes between two types of awards based on jury formation. In order to arrive at a conclusion, the thesis incorporates an interrupted time series analysis; a segmented regression in particular. The analysis indicates, that a nomination or winning a prize has a weak positive effect on successive chart performance. The precise effect differs depending on the particular prize. The effect of nomination or winning of awards decided by a jury of experts generally outweighs the effect of awards decided by a general public. Thus these results are consistent with the word-of-mouth effect theories.