Stay True to Your Roots? Category Distance, Hierarchy, and the Performance of New Entrants in the Music Industry

Abstract

New entrants in established markets face competing recommendations over whether it is better to establish their legitimacy by conforming to type or to differentiate themselves from incumbents by proposing novel contributions. This dilemma is particularly acute in cultural markets in which demand for novelty and attention to legitimacy are both high. We draw upon research in organizational theory and entrepreneurship to hypothesize the effects of pursuing narrow or broad appeals on the performance of new entrants in the music industry. We propose that the sales of novel products vary with the distance perceived between the classes being combined and that this happens, in part, because combinations that appear to span great distances encourage consumers to adopt superordinate rather than subordinate classes (e.g., to classify and evaluate something as a “song” rather than a “country song”). Using a sample of 144 artists introduced to the public via the U.S. television program The Voice, we find evidence of a U-shaped relationship between category distance and consumer response. Specifically, consumers reward new entrants who pursue either familiarity (i.e., nonspanning) or distinctive combinations (i.e., combine distant genres) but reject efforts that try to balance both goals. An experimental test validates that manipulating the perceived distance an artist spans influences individual evaluations of product quality and the hierarchy of categorization. Together these results provide initial evidence that distant combinations are more likely to be classified using a superordinate category, mitigating the potential confusion and legitimacy-based penalties that affect middle-distance combinations.