Does Chatter Matter? The Impact of User-Generated Content on Music Sales

The Internet has enabled a new era of user-generated content, threatening the hegemony of traditional content generators as the primary sources of "legitimate" information. In this study, we examine the usefulness of such content, consisting of data from blogs and social networking sites, in predicting sales in the music industry. We track changes in online chatter for a sample of 108 albums for four weeks before and after their release dates. We identify the significance of variables on the observation date in predicting future album unit sales one, two, and three weeks ahead. Our findings are that future sales are positively correlated with (a) the volume of blog posts about an album, and (b) traditional factors such as whether the album is released by a major label and reviews from mainstream sources like Rolling Stone. More generally, the study provides some preliminary answers for marketing managers interested in assessing the relative importance of the burgeoning number of "Web 2.0" information metrics that are becoming available on the Internet. The study also provides a framework for thinking about when user-generated content influences decision making. (C) 2009 Direct Marketing Educational Foundation, Inc. Published by Elsevier Inc. All rights reserved.