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Manufacturing Popularity: an Ecological Model of Time-Based Competition*

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Manufacturing Popularity: an Ecological Model of Time-Based Competition* Manufacturing Popularity: An Ecological Model of Time-Based Competition* William P. Barnett Stanford Graduate School of Business Mooweon Rhee School of Business, Yonsei University Elise Tak Stanford Graduate School of Business April 6, 2018 *Order of authorship is alphabetical. Thanks to the Stanford Graduate School of Business and the Yonsei University School of Business for support. We appreciate advice from Miron Avidan, Dror Etzion, Amir Goldberg, and Paul Ingram. 1 Manufacturing Popularity: An Ecological Model of Time-Based Competition Abstract Most models of competition depict organizations or products vying for resources arrayed over market dimensions at any given point in time. We observe that many markets, instead, feature competition for resources arrayed over time, with organizations or products competing to enjoy a moment of temporary advantage. We develop a model to understand such time-based competition, and estimate the model using data on Korean popular music. The results indicate the importance of social exposure to a product’s chances of becoming and remaining popular. They also show that efforts by large organizations to manufacture popularity in that context have triggered a self-defeating dynamic. These efforts improve the competitiveness of songs trying to become popular, but also increase competition from rival songs thereby intensifying the brevity of success. 2 Manufacturing Popularity: An Ecological Model of Time-Based Competition Many markets are characterized by very short product life cycles, where a product will go from being extremely popular to dying out over a just a few months or even weeks – only to be replaced by the next “new thing.” We see this pattern in fashion markets, of course, since they are explicitly structured around seasonality. But many other markets share the quality of short product life cycles (Katila and Ahuja, 2002; Abrahamson, 1991). For instance, technology-based products such as computer storage devices and telecommunications equipment go from rapid market penetration to obsolescence often in a matter of months (Eisenhardt and Schoonhoven, 1990). Even some inherently durable products are replaced in a rapid cadence, as in the automobile market where new models are introduced annually. And then there is the iconic example – cultural products such as commercial films and songs – that come and go rapidly (Grossman, 2012; Askin and Mauskapf, 2017), as parodied in the “15 minutes of fame” aphorism often attributed to Andy Warhol. In general, these diverse examples share a common pattern of rapid rise and decline over time. Driven by excitement, the new-new thing takes off dramatically until it peaks and falls, leaving the market ripe for the next new thing. Given the prevalence of such transitory products, it is noteworthy that research on competition rarely considers their dynamics. In the strategy field, the emphasis is on explaining enduring competitive advantage (Porter 2008), thereby diminishing the importance of products that come and go in fleeting moments of success. And when transitory products are considered, often they are depicted as ephemeral - faddish in a pejorative sense notable more for “hype” than for tangible significance, as in the Gartner “hype cycle” often referred to by strategy consultants 3 (Fenn and Raskino, 2008). Some approaches in economics and sociology allow for competitive dynamics, but they typically envision competition as occurring at the level of markets, market segments, or among collections of organizations such as fields, populations, categories, or networks (Soule and King, 2008; Brynjolfsson, Hu, and Simester, 2011; Stark and Vedres, 2012). Consequently, patterns of competition in the transitory comings and goings of individual products are overlooked by much of our extant theory (Carroll, Khessina and McKendrick, 2010). Yet judging by their prevalence, transitory products are collectively very important, even though they are – by definition – individually fleeting. Our aim here is to develop an ecological model of time-based competition; one that allows us to isolate how competition shapes the short lives of transitory products. Ordinarily, models of competition among products or organizations depict a process taking place over some resource space. Strategies then are understood in terms of an organization’s position across that space, and the ability of its products to compete in that position. By contrast, our model allows organizations to contend for resources arrayed over time. It depicts each product’s time for attracting resources as severely limited, with important implications for strategy and organization. For starters, resolving uncertainty about a new product is problematic when time is limited. And once a product launches, its fate hinges on whether it immediately becomes popular. Competition in such contexts is less about position in resource space and more about timing. Entering when a rival product is exploding to success may lead a product to end up languishing in the shadows. Yet waiting to enter amounts to ceding the market to a competitor, since the possible time for success is inherently limited. We theorize about how different organizational strategies shape the success and failure of products in such transitory markets. Our theory points to two distinct, but fundamentally 4 interrelated, mechanisms. The first, social exposure, involves efforts by organizations to draw attention to their products so that they enjoy growth in popularity. The second important mechanism is competition, which occurs if a product explodes to success – since this surge in popularity often comes at the expense of others. We argue that this competitive effect is distinct from the social exposure effect, and that the two effects together account for the frequently observed pattern of rise and decline seen in such markets. Our ecological model parameterizes each of these effects, and thereby allows us to investigate the effectiveness of observed organizational strategies – in this case looking at the context of Korean popular music. Rapid Product Cycles in Korean Popular Music The Korean popular music industry is ideal for our study because of its transitory product life cycles, and because of the different strategies followed by organizations. Over our study period, 2004 through 2014, the so-called “Hallyu” (Korean wave) movement grew explosively, with Korean-produced soap operas and music thriving in Korea but spreading as well to Japan, China, and beyond (Seabrook, 2015). This cultural movement is perhaps most notable for “Kpop,” shorthand for Korean popular music and dance, performed live and especially in music videos by so-called Korean “Idol” groups. These groups typically release songs and music videos featuring upbeat music and elaborately choreographed group dancing. In some cases, groups release music videos that achieve considerable attention worldwide, such as “Gangnam Style” released by Psy in 2012 (Fisher, 2012). For our study, we collected quantitative life- history data on all Idol songs and groups, and we conducted extensive interviews and case-study research on-site within Kpop production agencies (Identifying reference). 5 Note that “Idol” in this context refers to a genre category, rather than to a level of popularity as the term is used in western countries. In terms of their features, Korean Idols are similar to what are known as “boy bands” and “girl bands” in American popular culture, with some differences. Korean Idols are usually a group, consisting of 4-6 members, although there are rare cases of solo acts or as many as 13 in a group. Demographically, they are typically in their teens and are predominantly made up of same-sex members. Musical sub-genre within the Idol genre also exist. Dance music is the most popular sub-genre, although ballad, R&B and hip- hop are also represented. Note that the sub-genres of Idol music typically bear little resemblance to genres using these labels elsewhere in the world’s music scene. In part, this stems from the fact that youthful and cheerful looks, even for all-male Idols, are nearly universal in Korean Idol music. Figures 1-6 illustrate the development of Idol music over our study period, and clearly illustrate the rapid rise-and-fall characteristic of transitory products. 13,570 Idol songs were released over this period, growing steadily in number over time as shown in Figure 1. Figure 2 shows that each week a small fraction of these songs would make the top 100 weekly rankings, which includes Idol songs as well as songs from other popular music styles. Once popular, these hits attracted huge fanfare, but before long would fall off the top 100 list as shown in Figure 3. The net result was a steady increase in the number of popular Idol songs over the period, with the genre occupying typically 10% to 50% of the top 100 as shown in Figure 4. The rapid rise-and- fall of each song, as a function of duration, is shown in Figures 5 and 6. The steeper the slopes of these plots, the higher is the hazard rate of a song making, and then falling off, the top 100 list, respectively. Note that the rate of making the top 100 declined dramatically just days after a song was released, such that after only 11 days a song that had not yet become popular would 6 essentially never become popular. Once popular, these songs fell off the top 100 list at a steady rate, with all songs off the list within a year. ----------------------------------- Insert Figures 1-6 about here ----------------------------------- Perhaps the most notable implication of these patterns is the tremendous uncertainty faced by the production agencies that are trying to create popular products in this context. One typically sees large numbers of unsuccessful experiments in highly uncertain markets. Precisely this pattern emerged in the K-Pop context, where only a small fraction of Idol songs became hits. Of the 13,570 Idol songs released over our study period, only 2,316 (17%) became hits, as defined by whether or not the song makes it to the top 100 weekly charts.
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