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The Fat Lady Sings for Airplay Quotas: Cultural Protectionism Disrupted

The digital revolution has triggered dramatic shifts in how cultural products like music, books and film are produced, distributed and consumed. They are no longer physical items to be printed or pressed, but frictionless streams of bits. This has reduced reproduction and distribution costs to near-zero. The ground has shifted under traditional industries, with digital players such as Spotify and Netflix staking their claims on a landscape still ablaze with creative destruction.

The commercial implications are now apparent to all. Less well-understood, though, is the cultural significance of this revolution. We live in an era when the whole planet can watch the series finale of Breaking Bad as one – albeit some legally, some not. What does this mean for traditional cultural powerhouses: for the dominance of Hollywood in film or Nashville in country music?

Home bias in cultural trade

Surprising though it may seem, economists are interested in such questions, motivated in part by a longstanding puzzle: countries trade less than each other than they should. In particular, people are more likely to buy goods produced locally than goods produced abroad, even after accounting for the usual determinants of trade (such as price, distance and transport costs). Economists refer to this as ‘home bias’ in trade.

A leading study examining home bias in cultural products is Ferreira and Waldfogel (2013). They examine trade in popular music, analysing official charts data for 22 countries since 1960. They conclude that the ‘domestic share’ of music consumption (e.g. the proportion of music consumed in France that is produced by French artists) is high and has, if anything, increased since 1990.

Home bias in cultural goods is not surprising – some songs transcend national culture, and some, like Gangnam Style, even transcend language, but most culture remains tied to geography in one way or the other. The increase in home bias, however, is surprising. In a globalising, digitally-connected world, we might expect tastes to internationalise, as culture starts to decouple from place.

Ferreira and Waldfogel suggest that digital technology actually supports local culture, creating communities around local music scenes.  But music consumption is a difficult, moving target, and their measurement is by no means definitive: their data continue only up to 2007 – one year before Spotify was officially released, and the last year that Wal-Mart still sold more music than Apple. In short, the study captures trade in music right up to the cusp of the world in which we now live. At the same time, the official music charts (on which they rely) had already become an imprecise, incomplete and often out-of-touch reflection of how people really consume music.

Music charts 2.0

We’re using big data to explore whether these results still hold. Using Musicmetric’s database of over 10 million releases we can ask how digital trade compares with the traditional offline trade in music. We’re looking at legal services, including downloads (e.g. iTunes) and streaming (e.g. Spotify) and also at the predominantly pirate trade on Bittorrent. Digital consumption is fragmented across a multitude of different platforms, technologies and business models, so it’s essential to look at more than one if we’re to understand what’s happening.

Our initial conclusion is that the domestic share of consumption is generally lower online – in some cases substantially – as the figure illustrates. (Different online music platforms appear to have different domestic shares – this range of uncertainty is indicated by the lighter shading.). Domestic share is somewhat lower for the two music superpowers, the US and the UK, and considerably lower for middleweight music powers like France and Canada. These countries are particularly interesting, as each has enacted laws to protect domestic music (e.g. by imposing quotas on radio airplay). For other countries with airplay quotas, such as Australia and New Zealand, we don’t find a difference; however low domestic shares imply that airplay quotas were never particularly effective in these countries – whereas Ferreira and Waldfogel’s analysis suggests that in Canada and France they were. Our data suggest that digital music may now be radically altering this, reducing the efficacy of airplay quotas in countries where such policies were previously effective.

What we don’t yet know is whether this is a fully generalisable cultural phenomenon, or partly an artefact of different online listening groups. Research suggests that digital music consumers are likely to be younger, more technically literate - and therefore perhaps better educated - than average (see, e.g. the Oxford Internet Survey 2013). Perhaps users like that are simply more cosmopolitan in their music tastes than the average listener.

But even if this is the case, it warrants greater attention. Online users may be atypical, but atypical in the way that early adopters always are. This may be the beginning of an even more pronounced long term shift in how music and other cultural goods are consumed and traded than is usually assumed. If falling domestic shares are a sign of increasing concentration of cultural tastes, this could have dramatic impacts on carefully nurtured – and often legally protected - local content industries. For those worried about cultural diversity, it makes ever more relevant the arguments surrounding the ‘cultural exception’ in ongoing trans-Atlantic trade negotiations. For already-dominant players – potentially including the UK in music – it may instead seem a triumph of consumer sovereignty: global listeners voting with their streams, plays, purchases and downloads. One thing is for certain: broadcast quotas, the traditional response to concerns of cultural hegemony, will almost certainly be futile in future: analogue policy in an increasingly digital world.

Photo of woman at radio mic © CC BY 2.0 A. Germain


Andrew Whitby

Andrew Whitby

Andrew Whitby

Research Fellow, Creative Economy

Andrew was a Research Fellow focusing on the creative and digital economy. His work looked at new techniques in data science - both as a method for studying the creative and digital ec…

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