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Abstract

Motivated by the growing importance of social media, this paper examines the relationship between new media, old media, and sales in the context of the music industry. In particular, we study the interplay between blog buzz, radio play, and music sales at both the album and song levels of analysis. We employ the panel vector autoregression (PVAR) methodology, an extension of vector autoregression to panel data. We find that radio play is consistently and positively related to future sales at both the song and album levels. Blog buzz, however, is not related to album sales and negatively related to song sales, suggesting that sales displacement due to free online sampling dominates any positive word-of-mouth effects of song buzz on sales. Further, the negative relationship between song buzz and sales is stronger for niche music relative to mainstream music, and for less popular songs within albums. We discuss the implications of these results for both research and practice regarding the role of new media in the music industry.

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