The Impact of Cultural Events on Consumers' Awareness on Cultural Supply
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The Impact of Cultural Events on Consumers' Awareness on Cultural Supply Juan D. Montoro-Pons1 Manuel Cuadrado-Garc´ıa2 March 2018. Preliminary version Abstract Cultural products compete for public awareness in a saturated mar- ket characterized by an unpredictable demand, oversupply and a short product life cycle. Altogether, this means that only a small fraction of all releases generate the necessary consumer awareness to achieve a significant commercial success. How (and what) information about contents is spread among consumers is key to understand market out- comes. This paper aims at identifying whether participating in an established music festival increases the public awareness of artists and bands. To this end we measure public awareness of an artist using and index of Internet searches, and quantitatively evaluate the effect of performing at the festival on this search index. Preliminary findings support the hypothesis of a significant but temporary surge in web searches. Ponencia inclu´ıdaen el VIII Workshop en Econom´ıay Gesti´onde la Cultura (Universidad de Sevilla). 14 y 15 de Marzo de 2018 1Corresponding author. Departamento de Econom´ıaAplicada, Universitat de Val`encia, Spain. Email: [email protected] 2Departamento de Comercializaci´on e Investigaci´on de Mercados, Universitat de Val`encia,Spain 1 1 Introduction The cultural industries rely on a steady and diversified flow of contents that caters for heterogeneous,unpredictable demand in a market characterized by oversupply, a short product life cycle and with only a small fraction of all re- leases achieving significant commercial success. Consequently, strategies in cultural markets aim, in the short run, at raising potential consumers' aware- ness of the supply in the expectation of monetizing this increased awareness in the middle run. In the music industry, promotion and live performances stand out as the main tools performers use to make consumers aware of the choice set, inducing product discovery, knowledge spread and spillover effects on re- lated cultural products (akin to those discussed in Hendricks and Sorensen 2009). Even though the role of live performances as a tool to raise sales of prerecorded music has become increasingly marginal (see Montoro-Pons and Cuadrado-Garc´ıa2011, on the weakening of the complementarity relation between live and recorded music), these could be linked to alternative direct and indirect income sources, such as streaming or the enlargement of [future] audiences. Indeed, with the increasing use of social media, consumer-based content becomes more and more relevant and amplified when the right con- ditions are met. One example are cultural events, whose attendees dissemi- nate information that, by a snow-ball effect, have an impact beyond actual audiences. In the case of live music, festivals are the most noticeable instance of such cultural events. Music festivals can be seen as market institutions that, through their greater flexibility and less constrained programming (see Frey 1994), aim at specific audiences by combining a (usually) diversified but coherent lineup in an attempt to prescribe and help shaping the taste of the public. The apparent contradiction in the previous statement stems from the hierarchical structure of the lineup which usually combines more successful (even superstars) artists with middle-class and lesser-known ones. 2 In this respect, Paleo and Wijnberg (2006) describe music festivals as selectors that, by fulfilling a signaling and classification function, help con- sumers reduce uncertainty. The relevance of this taste-formation role is linked to the brand equity and reputation of festivals, an asset that is built up over time through repeated interactions with the public and that is key to understanding the magnitude of increased public awareness performers at these festivals attract.1 Indeed, the average performer playing at a festival benefits from its brand value and from being associated with a larger roster of bands, which can reach out a more diverse audience. As Leenders (2010) shows, it is brand equity and not the program itself what explains atten- dance at music festivals. In this process, attendees move their focus from the lineup to the festival itself, which actually transforms them in gatekeepers. The aim of this paper is to estimate the impact, in terms of public awareness, of headlining an established music festival by analyzing the time series of the web search index for each performer. The research hypoth- esis is that there is a positive, albeit transient, impact on searches after performing at the festival. To this end the difference between observed and predicted searches is computed, where the latter are the counterfactual searches had the festival not taken place. In other words, we estimate the indirect value that a performance in the festival adds to a band as the dif- ference between actual searches and what would have been observed should the band/performer not participated in the festival. Average relative change in awareness is computed for different time spans after the festival has taken place, and results show a support for the formulated hypotheses. The paper is structured as follows. Next the research hypotheses are introduced. Then the dataset is presented and described along with the identification of specific traits of the sample and the performers that form it. The methodology comes next followed by the results on the estimated 1As it has been already mentioned, this raised awareness, a process that extends beyond actual audiences through the impact in the media and social networks, is most of the times expected to be greater than what isolated acts would achieve performing individually. 3 impact for headliners of the festival. The paper closes with some concluding remarks. 2 Research hypotheses To some extent, an individual's cultural demand can be seen as path depen- dent, in that it is primarily accumulated knowledge and previous experiences that determine, by restricting the choice set, what is consumed. In this re- gard, discovery processes, such as those led by observational learning (see for instance Hendricks et al. 2012), allow consumers to become aware of the variety of the market supply. How this learning takes place is a complex issue, as cultural consumers are exposed to a large amount of information on the availability of content, however we consider that certain cultural events, acting as selectors in the market, trigger this process. The main argument of this paper is that festivals, by supplying a heterogeneous although coherent lineup of performances, add value (on average) to individual performances that ultimately induce a discovery process. To formalize this argument, we estimate the increase in public awareness on specific performers in the lineup of an established music festival after it has taken place. We do so by analyzing the evolution of a web search index as we assume it reflects the interest of the potential demand on the performer. The effect is mediated by the brand equity of the cultural event, such that the greater the brand equity, the more the expected impact ceteris paribus. In this way, the visibility of the music festival, i.e. the credibility and awareness among cultural consumers, and the positive associations it fosters, which can be either functional or intangible benefits that consumers identify, determine how strong the effect will be. In other words, performers temporarily capture part of the value of the brand equity an established cultural event has built up. Therefore, our primary research hypothesis is: 4 H1 A music festival increases the awareness of consumers on the partici- pating artists/bands measured by an increase in web searches. However, and given the constant flow of new cultural products in the market, this effect is considered to be temporary. H1b The increased awareness declines after the festival has taken place. We further hypothesize the expected effect is asymmetric depending on the relative awareness of the performer to that of the festival. In this sense, we expect the benefits of the participation in the festival to be biased towards the middle class and lesser-known acts, and superstars reaping less benefits for different reasons. The rationale under this assumption is as follows. On the one hand, larger (superstar) bands need not be associated to a diversified lineup to command public awareness. Quite on the contrary, their brand equity makes them an asset to a lineup expanding the awareness of the festival. On the other hand, the lineup effect, i.e. being associated with a varied lineup and with more successful acts, could increase the exposure of for middle class and lesser known acts. In other words, we expect the effect to be smaller (on average) for upper middle class bands and superstars. Therefore, we formulate the following hypothesis: H2 The impact as per H1 is decreasing in the success/awareness of the band. 3 The dataset To test the foregoing hypothesis we collected data on an index of Internet searches of the headliners in the Primavera Sound, a well established music festival that takes place annually in Barcelona (Spain). We focused on the 2016 edition, that attracted an audience of over 200,000 people attending 349 performances spread over four days (1-5 June). The metric used to 5 measure public awareness is the Google trends weekly search index for par- ticipating performers.2 From H1−H2 we hypothesize that there is a positive (and asymmetric), albeit transient, impact on searches for headliners at the festival. Weekly data on Internet searches was obtained for each performer head- lining the Primavera Sound festival. Specifically, the dataset covers Google searches in Spain for 19 performers over a period of 261 weeks, from Febru- ary 2012 to February 2017. Two observations apply. First, the Primavera Sound festival took place in week 223 of the dataset. Second, headliners are defined as performers that appear with a larger and bolder typeface in the first block at the top of the general lineup poster for the festival.3 Two per- formers (John Carpenter and Beirut) were excluded due to the ambiguity of the search term.