Competition, Selection and Rock and Roll: The Economics of Payola and Authenticity

Abstract

Understanding the way in which value of a product is determined is a prerequisite for understanding the way in which firms compete. To compete successfully one's products have to be valued and recognized as valuable. This is the starting point of looking at competitive processes from the perspective of the selection system (Wijnberg 1995; 2004; Wijnberg and Gemser 2000; Priem 2007). In a selection system, the actors competing with each other are called the and the actors who determine the value of the goods being offered by the competitors are called the It is important to realize that selectors themselves can be involved in their own competitive process. In addition, the competitors who are the selected in the original selection system can be involved in the competitive process among the selectors, supporting particular selectors in their selection system. In the most extreme case, particular selected can ally themselves with particular selectors to support each other in their respective competitive arenas. This theoretical approach will be employed to analyze the events that unfolded after the introduction of Rock and Roll in the U.S. music industry halfway through the 1950s, focusing on the so-called payola scandal. The cultural industries seem exceptionally suitable for studying the relationship and interaction between the selectors and the selected. This stems from the fact that within the cultural industries the role that the selectors play in the determination of value is generally more visible than in many other industries. The harder it is to determine the value of individual product characteristics, the more valuable is the necessary knowledge and expertise (Hirsch 1969; 1972; Peterson and Berger 1975; Wijnberg 1995; Wijnberg and Gemser 2000; Caves 2000). This in itself increases the value of the services rendered by the relevant selectors, as selectors. It

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