Abstract

The revenue model in the music industry has shifted from selling physical products such as CDs to driving streaming demand. However, subscribers of streaming services such as Spotify face overwhelming choice among millions of songs. Playlists, which are curated collections of songs, have emerged as an important tool for music consumption and discovery by helping consumers to navigate vast content libraries. However, despite their potential pivotal role in driving streaming demand, little is known about the factors that make playlists effective. This paper studies (1) how the inclusion of a song on curated playlists affects this song’s demand, (2) how playlist and song characteristics moderate this effect, (3) how the inclusion effect differs from the removal effect, and (4) how artists can influence playlist inclusion. Using weekly streaming data for 54,000 songs and curation information for more than 60,000 playlists over a period of 3 years, the paper documents that average elasticities for playlists are stronger than those for radio, advertising and social media, but the effectiveness is highly variable. In line with the notion that playlists enable the discovery of unknown songs, playlists are especially effective for older songs from less famous artists in niche genres. Playlists become more effective when they feature more unexpected songs, various genres, and context-based curation. Additionally, the positive long-term effect of song inclusion on a playlist is stronger than the negative effect of song removal, suggesting a demand uplift even after a song has been removed from a playlist. To influence the inclusion of songs on playlists, radio is most effective, followed by advertising.

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