Faddists and enthusiasts

This paper constructs a model of the recorded music market to investigate the consequences of local content requirements in broadcasting for the ‘internationalization’ of domestic music. We model the entry decisions of bands, the contracting decisions of record companies, the airplay decisions of radio stations and the radio listening and recording purchasing decisions of consumers. We show that, through the entry decisions of bands, a local content quota leads, perversely, to the increased internationalization of domestic music. A quota that also requires increased broadcasting of ‘new’ music yields an additional welfare loss but does nothing to a record company’s incentives to sign up new bands.