The recording industry as an heterogeneous population and the new behaviours emerging in the digital era

Abstract

Artists and record labels within the music industry generally value artistic expression and profit making with varying degrees, and hence, they may be modelled as an heterogeneous population of producers. It is argued that the internet not only encourages the appearance of artists who prioritise artistic expression over profits, but also raises the level of the listeners’ awareness about this distinction; this, in turn, is possible to prompt record companies adjust their marketing strategies accordingly. Assuming that consumers have an incentive to support artistic motivation, it is shown that the greater the dimension of the heterogeneity, the more accurately the consumer can reward artists with no solely profit making intentions, contingent on the consumer's beliefs and behavioural profile. This leads to the conclusion that consumers may experience an increase in the utility derived from purchasing music, an assertion that might seem counter-intuitive in today’s digital economy.