Product Success in Cultural Markets: The Mediating Role of Familiarity, Peers, and Experts

Keuschnigg, Marc (2015): Product Success in Cultural Markets: The Mediating Role of Familiarity, Peers, and Experts. Published in: Poetics No. 10.1016/j.poetic.2015.03.003

Abstract

The mediation of ambiguous markets has been essential to recent developments in economic sociology. Cultural industries provide a valuable testing ground for its perspective of socially influenced market behavior. This article emphasizes the uncertainty of cultural markets and thus the relevance of social valuation in disseminating new releases. I hypothesize that recipients of culture simplify cultural choice by reacting to easily attainable signals of product value. Mechanisms of valuation include product familiarity, peer influence, and expert critique. Focusing on an exemplary cultural market, I confront theoretical implications with data from the German book industry (2001–2006). Panel and cross-section regressions show that, alongside well-defined market segments, separate mechanisms guide consumer behavior. For incumbents’ offerings, prior recognition stabilizes cultural choice and reinforces differences in market success. In the highly ambiguous newcomer segment, imitation and negative media steer audience attention, at times leading to unsatisfactory aggregate outcomes, i.e. ‘bad’ bestsellers.

• Item Type: MPRA Paper
• Language: English
• Keywords: Bestsellers, book market, cultural choice, cultural markets, diffusion, fixed effects individual slopes regression, market mediation, imitation, quantitative content analysis
• Subjects: D - Microeconomics > D8 - Information, Knowledge, and Uncertainty; L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance; Z - Other Special Topics > Z1 - Cultural Economics ; Economic Sociology ; Economic Anthropology > Z11 - Economics of the Arts and Literature

References

Adler, M., 1985. Stardom and talent. American Economic Review 75 (1): 208-12.

Azoulay, P., Stuart, T., Wang, Y., 2014. Matthew: effect or fable? Management Science 60 (1): 92-109.

Banerjee, A.V., 1992. A simple model of herd behavior. Quarterly Journal of Economics 107 (3): 797-817.

Basuroy, S., Chatterjee, S., Ravid, S.A., 2003. How critical are critical reviews? The box office effects of film critics, star power, and budgets. Journal of Marketing 67 (4), 103-17.

Baumann, S., Dowd, T.J., Janssen, S., 2009. Introduction: classifying culture—agents, structures, processes. Poetics 37 (4): 295-7.

Bass, F.M., 1969. A new product growth model for consumer durables. Management Science 15 (5): 215-27.

Becker, G.S., 1976. The economic approach to human behavior. University of Chicago Press, Chicago.

Becker, G.S., Murphy, K.M., 2000. Social economics: market behavior in a social environment. Belknap Press of Harvard University Press, Cambridge.

Beckert, J., 2009. The social order of markets. Theory and Society 38 (3): 245-69.

Berger, J., Sorensen, A.T., Rasmussen, S.J., 2010. Positive effects of negative publicity: when negative reviews increase sales. Marketing Science 29 (5): 815-27.

Bielby, W.T, Bielby, D.D., 1994. “All hits are flukes”: institutionalized decision making and the rhetoric of network prime-time program development. American Journal of Sociology 99 (5): 1287-313.

Bikhchandani, S., Hirshleifer, D., Welch, I., 1992. A theory of fads, fashion, custom, and cultural change as informational cascades. Journal of Political Economy 100 (5): 992-1026.

Börsenverein des deutschen Buchhandels, 2007. Buch und Buchhandel in Zahlen. Börsenverein, Frankfurt.

Bourdieu, P., 1984. Distinction: a social critique of the judgement of taste. Harvard University Press, Cambridge.

Bourdieu, P., 1996. The rules of art: genesis and structure of the literary field. Stanford University Press, Stanford.

Brüderl, J., Ludwig, V., 2015. Fixed-effects panel regression. In: Best, H., Wolf, C. (Eds.), The SAGE Handbook of Regression Analysis and Causal Inference. Sage, Los Angeles, pp. 327-357.

Buchreport, 2008. Bestseller-Archiv. http://www.buchreport.de, retrieved August 2008.

Chamley, C.P., 2004. Rational herds: economic models of social herding. Cambridge University Press, Cambridge.

Chevalier, J.A., Mayzlin, D., 2006. The effect of word of mouth on sales: online book reviews. Journal of Marketing Research 43 (3): 345-54.

Cialdini, R.B., 1984. Influence: the psychology of persuasion. Quill, New York.

Clark, C.R., Clark, S., Polborn, M.K., 2006. Coordination and status influence. Rationality and Society 18 (3): 367-91.

Clement, M., Proppe D., Rott, A., 2007. Do critics make bestsellers? opinion leaders and the success of books. Journal of Media Economics 20 (2): 77-105.

Coleman, J.S., Katz, E., Menzel, H., 1957. The difusion of an innovation among physicians. Sociometry 20 (4): 253-70.

Craig, A., Dubois, S., 2010. Between art and money: the social space of public readings in contemporary poetry economies and careers. Poetics 38 (5): 441-60.

Denrell, J., Kovács, B., 2008. Selective sampling of empirical settings in organizational studies. Administrative Science Quarterly 53: 109-44.

DeVany, A., 2004. Hollywood economics: how extreme uncertainty shapes the film industry. Routledge, New York.

DeVany, A., Walls, D.W., 1999. Uncertainty in the movie industry: does star power reduce the terror of the box office? Journal of Cultural Economics 23 (4): 285-318.

DiMaggio, P., 1977. Market structure, the creative process, and popular culture: toward an organizational reinterpretation of mass-culture theory. Journal of Popular Culture 11 (2): 436-52.

DiMaggio, P., 1987. Classification in art. American Sociological Review 52 (4): 440-55.

DiMaggio, P., Garip, F., 2011. How network externalities can exacerbate intergroup inequality. American Journal of Sociology 116 (6): 1887-933.

DiMaggio, P., Powell, W., 1983. The iron cage revisited: institutional isomorphism and collective rationality in organizational fields. American Sociological Review 48 (2): 147-60.

DiPrete, T.A., Eirich, G.M., 2006. Cumulative advantage as a mechanism for inequality: a review of theoretical and empirical developments. Annual Review of Sociology 32: 271-97.

Dobrescu, L.I., Luca, M., Motta, A., 2013. What makes a critic tick? Connected authors and the determinants of book reviews. Journal of Economic Behavior & Organization 96: 85-103.

Ehrmann, T, Schmale, H., 2008. The hitchhiker’s guide to the long tail: the influence of online review and product recommendations on book sales—evidence from German online retailing. Proceedings of the International Conference on Information Systems, Paper 157.

Eliashberg, J., Shugan, S.M., 1997. Film critics: influencers or predictors? Journal of Marketing 61 (2): 68-78.

Elwert, F., Winship, C., 2014. Endogenous selection bias: the problem of conditioning on a collider variable. Annual Review of Sociology 40: 31-53.

Frank, R.H., Cook, P., 1995. The winner-take-all society. Free Press, New York.

Gemser, G., van Oostrum, M., Leenders M.A., 2007. The impact of film reviews on the box office performance of art house versus mainstream motion pictures. Journal of Cultural Economics 31 (1): 43-63.

Godes, D., Mayzlin, D., 2004. Using online conversations to study word-of-mouth communication. Marketing Science 23 (4): 545–60.

Goldman, W., 1983. Adventures in the screen trade. Warner Books, New York.

Gould, R.V., 2002. The origins of status hierarchies: a formal theory and empirical test. American Journal of Sociology 107 (5): 1143-78.

Graham, S., 1954. Cultural compatibility in the adoption of television. Social Forces 33 (2): 166-70.

Granovetter, M., 1978. Threshold models of collective behavior. American Journal of Sociology 83 (6): 1420-43.

Hannan, M.T., 2010. Partiality of memberships in categories and audiences. Annual Review of Sociology 36: 159-81.

Hedström, P., 1998. Rational imitation. In: Hedström, P., Swedberg, R. (Eds.), Social mechanisms: an analytical approach to social theory. Cambridge University Press, Cambridge, pp. 306-27.

Helbing, D., Farkas, I., Vicsek, T., 2000. Simulating dynamical features of escape panic. Nature 407 (6803): 487-90.

Hendricks, K., Sorensen, A., 2009. Information and the skewness of music sales. Journal of Political Economy 117 (2): 324-69.

Heydebrand, R. von, Winko, S., 1996. Einführung in die Wertung von Literatur: Systematik, Geschichte, Legitimation. UTB, Paderborn.

Hirsch, P.M., 1972. Processing fads and fashions: an organization-set analysis of cultural industry systems. American Journal of Sociology 77 (4): 639-59.

Homburg, C., Klarmann, M., 2004. Betriebswirtschaftliche Auswirkungen möglicher Veränderungen der Honorarsituation in Verlagen als Folge der Urheberrechtsnovellierung. Zeitschrift für Urheber- und Medienrecht 48 (10): 704-8.

Hsu, G., Hannan, M.T., Kocak, Ö., 2009. Multiple category memberships in markets: an integrative theory and two empirical tests. American Sociological Review 74 (1): 150-69.

Katz, E., Lazarsfeld, P.F., 1955. Personal influence: the part played by people in the flow of mass communication. Free Press, New York.

Katz, M.L., Shapiro, C., 1986. Technology adoption in the presence of network externalities. Journal of Political Economy 94 (4): 822-41.

Kelly, M., 2008. Financial market contagion. In: Durlauf, S.N., Blume, L.E. (Eds.), The new Palgrave dictionary of economics. Palgrave Macmillan, New York.

Keuschnigg, M., Wolbring, T., 2015. Disorder, social capital, and norm violation: three field experiments on the broken windows thesis. Rationality and Society 27 (1): 96-126.

Köhler, M., 1999. Wertung in der Literaturkritik. Dissertation, University of Würzburg.

Kovács, B., Sharkey, A., 2014. The paradox of publicity: how awards can negatively affect the evaluation of quality. Administrative Science Quarterly 59 (1): 1-33.

Lamont, M., 2012. Toward a comparative sociology of valuation and evaluation. Annual Review of Sociology 38: 201-21.

Mahajan, V., Peterson, R.A., 1985. Models for innovation diffusion. Sage, Beverly Hills.

Mahoney, J., 2000. Path dependence in historical sociology. Theory and Society 29 (4): 507–48.

Merton, R.K., 1948. The self-fulfilling prophecy. Antioch Review 8 (2): 193-210.

Merton, R.K., 1968. The Matthew effect in science. Science 159 (3810): 56-63.

Meyer, J.W., Rowan, B., 1977. Institutionalized organizations: formal structure as myth and ceremony. American Journal of Sociology 83 (2): 340-63.

Negro, G., Kocak, Ö., Hsu, G., 2010. Research on categories in the sociology of organizations. Research in the Sociology of Organizations 31: 3-35.

Nelson, P., 1970. Information and consumer behavior. Journal of Political Economy 78 (2): 311-29.

Peterson, R.A., 1976. The production of culture: a prolegomenon. American Behavioral Scientist 19 (6): 669-84.

Peterson, R.A., 1992. Understanding audience segmentation: from elite and mass to omnivore and univore. Poetics 21 (4): 243-58.

Podolny, J.M., 2005. Status signals: a sociological study of market competition. Princeton University Press, Princeton.

Reddy, S.K., Swaminathan, V., Motley, C.M., 1998. Exploring the determinants of Broadway show success. Journal of Marketing Research 35 (3): 370-83.

Reinstein, D.A., Snyder, C.M., 2005. The influence of expert reviews on consumer demand for experience goods: a case study of movie critics. Journal of Industrial Economics 53 (1): 27-51.

Riffe, D., Lacy, S., Fico, F., 2005. Analyzing media messages: using quantitative content analysis in research. Routledge, New York.

Rogers, E.M., 2003. Diffusion of innovations. 3rd ed. Free Press, New York.

Rossman, G., 2014. The diffusion of the legitimate and the diffusion of legitimacy. Sociological Science 1: 49-69.

Salganik, M.J., Dodds, P.S., Watts, D.J., 2006. Experimental study of inequality and unpredictability in an artificial cultural market. Science 311 (5762): 854-6.

Salganik, M.J., Watts, D.J., 2008. Leading the herd astray: an experimental study of self-fulfilling prophecies in an artificial cultural market. Social Psychology Quarterly 71 (4): 338-355.

Sauder, M., Lynn, F., Podolny, J.M., 2012. Status: insights from organizational sociology. Annual Review of Sociology 38: 267-83.

Shocker, A.D., Ben-Akiva, M., Boccara, B., Nedungadi, P., 1991. Consideration set influences on consumer decision-making and choice: issues, models, and suggestions. Marketing Letters 2 (3): 181-97.

Shrum, W., 1991. Critics and publics: cultural mediation in highbrow and popular performing arts. American Journal of Sociology 97 (2): 347-75.

Siegel, D.A., 2009. Social networks and collective action. American Journal of Political Science 53 (1): 122-38.

Sorensen, A.T., 2007. Bestseller lists and product variety. Journal of Industrial Economics 55 (4): 715-38.

Strang, D., Macy, M.W., 2001. In search of excellence: fads, success stories, and adaptive emulation. American Journal of Sociology 107 (1): 147-82.

Strang, D., Soule, S.A., 1998. Diffusion in organizations and social movements: from hybrid corn to poison pills. Annual Review of Sociology 24: 265-90.

Thompson, J.B., 2012. Merchants of culture: the publishing business in the twenty-first century. 2nd ed. Polity Press, Cambridge.

Veblen, T., 1899. The theory of the leisure class: an economic study of institutions. Macmillan, London.

Verboord, M.N.M., 2011. Market logic and cultural consecration in French, German and American bestseller lists, 1970-2007. Poetics 39 (4): 290-315.

Watts, D.J., Dodds, P.S., 2007. Influentials, networks, and public opinion. Journal of Consumer Research 34 (4): 441-58.

Wooldridge, J., 2010. The econometrics of cross-section and panel data. MIT Press, Cambridge.

Zhao, E.Y., Ishihara, M., Lounsbury, M., 2013. Overcoming the illegitimacy discount: cultural entrepreneurship in the US feature film industry. Organization Studies 34 (12): 1747-76.

Zuckerman, E.W., 1999. The categorical imperative: securities analysts and the illegitimacy discount. American Journal of Sociology 104 (5): 1398-438.

Zuckerman, E.W., 2012. Construction, concentration, and (dis)continuities in social valuations. Annual Review of Sociology 38: 223-45.

Zuckerman, E.W., Kim, T.-Y., 2003. The critical trade-off: identity assignment and box-office success in the feature film industry. Industrial and Corporate Change 12 (1): 27-67.