DP8719 Superstars and the Long Tail: The impact of technology on market structure in media industries

Author(s): Helen Weeds
Publication Date: December 2011
Keyword(s): creative industries, digital media, long tail, superstars
JEL(s): L11, L15, L82
Programme Areas: Industrial Organization
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=8719

Technological change is transforming creative media industries. Digitisation lowers recording, storage, reproduction and distribution costs, while computer-based editing facilitates higher quality and special effects. With electronic distribution a vast range of content can be made available to consumers across global markets. The distribution of industry sales appears to be shifting: the late 20th century was the era of the 'hit parade' but attention has now shifted to the 'long tail'. This paper develops a model of differentiated products with endogenous quality and heterogeneous firms to examine the implications of technological change for product variety, quality, and the distribution of firms in media industries.