Intrafirm competition and release dates: evidence from the recorded music industry

Abstract

ABSTRACT Major consolidation has occurred in the recorded music industry over the past 20 years, which has led some industry stakeholders to question the power and influence of the major remaining firms. I test whether there is evidence that subsidiaries of the large parent firms in this industry act as a cohesive unit or if they focus on maximizing their own profit without taking into consideration the effect they have on sister firms (other firms owned by the same parent). I do so by analyzing how release date timing differs between labels that are owned by the same parent company and those that are not. Using data on release dates, song/artist characteristics, and label ownership for the top-10 Billboard Hot 100 hits from 1990 to 2013, I am able to compare the length of time between releases for songs released by co-owned labels and songs released by separately owned labels. I find that overall, there is not a systematic difference in the release of songs produced by the same major compared to songs produced by different majors. These results suggest that subsidiary labels may in fact be acting independently—not internalizing the effect they have on sister firms.