Discovery of Music through Peers in an Online Community

Peer influence in social networks has been studied for over four decades by social scientists and marketing researchers. Due to recent growth of internet technologies and online social networks, research on peer influence has gained even more attention over the last decade. But, most extant empirical work measuring peer effect faces challenges due to selection problem, difficulty in separating source of influence, and accounting for a user´s pre-existing knowledge. In this paper we overcome these challenges by strategically dissecting the archival data and find that the online users have a small but statistically significant influence on other peers in discovery of music. We cleanly and empirically estimate that online users are 6 times more likely to discover new music because of their peers in an online community when compared to discovery in the absence of those peers.