ECONOMICS OF SOCIAL MEDIA STARS: New evidence on what drives popularity and success on YouTube

16 Apr 2019

The stars of social media such as YouTube have to strike a careful balance to maintain and boost their popularity: uploading enough new material for ‘attention-volatile’ consumers, while not stressing their ‘attention-scarce’ audience with too many uploads.

That is one of the findings of new research by Oliver Budzinski and Sophia Gaenssle, to be presented at the Royal Economic Society's annual conference at the University of Warwick in April 2019. Their study shows that a certain amount of activity positively influences success, while too much content has a negative impact, potentially leading to information overload.

A new type of superstar has emerged with the growing relevance of social media such as YouTube or Instagram: social media stars or so-called influencers. According to Forbes News, the top 10 YouTubers of 2018 earned an aggregate $180.5 million, which is an increase of 42% from the year before.

The growing reach, economic power and social influence of those stars has also drawn the attention of media economists. This research focuses on the new star phenomenon and analyses the factors of success from an economic point of view.

The authors study 200 YouTubers in four different categories: Gaming; People & Blogs; How to & Style; and Comedy. Not everything is new in the social media world: some success factors that fuelled the popularity of stars in traditional media remain relevant for social media stars.

Previous success significantly influences the current success of social media stars, making survival in the market a crucial factor. Moreover, top stars can use prior success to increase their fame compared with medium-ranked stars. Due to bandwagon effects, they can extend their lead and snowball into superstardom.

But there are also new factors of the digital era. In contrast to traditional media stars, social media stars can influence their popularity by specific upload behaviours. On the internet, attention on the consumer side is volatile and scarce, as a person can only process a limited amount of information per unit of time and alternative content is just a click away.

Thus, social media stars have to make sure to be continuously and reliably active and provide enough information for (attention-volatile) consumers, while not stressing their (attention-scarce) audience with too many uploads.

The study finds empirical evidence that a certain amount of activity positively influences success, while too much content has negative impact, potentially leading to information overload. Drawing attention represents a barrier to entry in information-rich markets, such as social media, and makes long-term audience building and maintenance a permanent task.

Oliver Budzinski

Professor of Economic Theory | Institute of Economics and Institute of Media and Mobile Communications, Ilmenau University of Technology | oliver.budzinski@tu-ilmenau.de

Sophia Gaenssle

Institute of Economics, Ilmenau University of Technology | +49 3677 69 4039 | sophia.gaenssle@tu-ilmenau.de