Video Killed the Radio Star? Online Music Videos and Recorded Music Sales

Abstract

We study how online video platforms affect the sales volume and sales distribution of recorded music. To do so, we study two events that removed and then partially restored access to online music videos for consumers in Germany. Because of a legal dispute, virtually all music videos were blocked from YouTube, which led to a decrease in record sales of about 5%–10%. When the dedicated platform Vevo entered a few years later, record sales increased again by a similar amount. This is effect can be attributed to user-generated content (fan videos and cover versions) as much as to official music videos. Record sales of newcomer artists and mainstream music benefit disproportionally. We discuss the implications for debates on the reform of compulsory licensing rules and copyright.