Video Killed the Radio Star? Online Music Videos and Recorded Music Sales

We study the heterogeneous effects of online video platforms on the sales volume and sales distribution of recorded music. Identification comes from two natural experiments in Germany. In 2009, virtually all music videos were blocked from YouTube due to a legal dispute. In 2013, the dedicated platform VEVO entered the market, making videos of a large number of artists available over night. Our most conservative estimates suggest that restricting (enabling) access to online videos decreases (increases) recorded music sales on average by  about 10%.  We  show that the effect operates independent of   the nature of video content, suggesting that user-generated content is as effective as official content. Moreover, we highlight important heterogeneity. Online music video disproportionally benefits sales of new artists and sales of mainstream music.