YouTube Decade: Cultural Convergence in Recorded Music∗ Lisa M. George Christian Peukert Hunter College and University of Zurich the Graduate Center, CUNY June 17, 2016 Abstract Digital technology has the potential to impact the diffusion of new goods both within and across markets. The net effect of technology on globalization is thus an empirical question. We study the role of YouTube in globalizing the market for recorded music. We consider the US, Germany and Austria, exploiting a natural experiment that has blocked official music videos on YouTube in Germany since 2009. We document a causal link between YouTube access and both global and local outcomes. YouTube increases overlap with US weekly top charts, a globalizing effect, but also induces greater chart penetration of domestic music, a local effect. We show that the dual result is driven in part by the dynamics of the market: YouTube increases chart turnover, which expands the market for domestic titles. Our results indicate that global platforms need not advantage global culture. Keywords: Digitization, Trade, Globalization, Media, Superstars, Natural Experiment JEL No.: L82, O33, D83 ∗The authors gratefully acknowledge the financial support of this research by the NET Institute, http://www.NETinst.org. Lisa M. George, Department of Economics, Hunter College, 695 Park Ave., New York, NY 10065. Email:
[email protected]. Christian Peukert, Chair for Entrepreneurship, University of Zurich, Affolternstrasse 56, 8050 Z¨urich, Switzerland. Email:
[email protected]. 1 Introduction Twentieth century innovations in media technology influenced the adoption and diffusion of new goods, and in some cases the industrial organization of product markets themselves.