A large quasi-experiment in Germany shows that user generated video streaming helps the niche but hurts big artists total music industry revenues.An ongoing debate among firms, rightsholders, particularly in the music industry, and policymakers in the United States and the European Union concerns potential changes to the regulation of user-generated content (UGC) video streaming platforms (e.g., YouTube). Currently, safe harbor provisions protect platforms from liability for copyright-infringing content uploaded by users, and requirements for compensating rightsholders for UGC are weak, resulting in comparatively low payouts. At the same time, it is unclear how a change in these regulations would affect consumer demand for this content on other platforms with higher payouts (e.g., Spotify), that is, whether UGC platforms stimulate or displace demand on other platforms. We study a quasi-experiment that occurred when numerous songs became available as UGC on YouTube after an agreement between YouTube and the German royalty collecting society. Our analysis of an unprecedented data set covering 600,000 songs by 38,000 artists reveals an intriguing finding: Although UGC availability stimulates demand in other streaming channels for most songs, cannibalization occurs for recent releases and hit releases, turning the overall revenue effect negative. We discuss how policymakers can use these findings to understand the implications of changes in regulation, and how labels and artists can decide which content to block or allow on UGC platforms.History: Olivier Toubia served as the senior editor. This paper was accepted through the Marketing Science: Frontiers review process.Supplemental Material: The data and online appendices are available at https://doi.org/10.1287/mksc.2022.0080 .
An ongoing debate among firms, rightsholders, particularly in the music industry, and policymakers in the United States and the European Union concerns potential changes to the regulation of user-generated content (UGC) video streaming platforms (e.g., YouTube). Currently, safe harbor provisions protect platforms from liability for copyright-infringing content uploaded by users, and requirements for compensating rightsholders for UGC are weak, resulting in comparatively low payouts. At the same time, it is unclear how a change in these regulations would affect consumer demand for this content on other platforms with higher payouts (e.g., Spotify), that is, whether UGC platforms stimulate or displace demand on other platforms. We study a quasi-experiment that occurred when numerous songs became available as UGC on YouTube after an agreement between YouTube and the German royalty collecting society. Our analysis of an unprecedented data set covering 600,000 songs by 38,000 artists reveals an intriguing finding: Although UGC availability stimulates demand in other streaming channels for most songs, cannibalization occurs for recent releases and hit releases, turning the overall revenue effect negative. We discuss how policymakers can use these findings to understand the implications of changes in regulation, and how labels and artists can decide which content to block or allow on UGC platforms.