Reputation Spillover in Digital Markets
When agencies help or hurt creators
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By Sam Ransbotham, Marios Kokkodis, and Panagiotis Adamopoulos.
Users now upload over 500 hours of YouTube content per minute. Listeners could listen to more than 4,370,485 podcasts in December 2024. Spotify users can choose from more than 100 million songs. With everyone still limited to 24 hours a day, how can we ensure that we use those hours on content that we want?
Digital platforms have reshaped markets by connecting creators with consumers, removing traditional intermediaries, and lowering barriers to entry. This transformation created a vibrant ecosystem of new creators, from independent musicians to self-published authors, all vying for consumer attention. Yet, these platforms have also introduced a paradox: while creators now have access to vast audiences, they struggle to stand out in increasingly crowded digital marketplaces.
The availability of the Internet has led to widespread disintermediation. Consumers can connect directly to producers, eliminating the frictions and margins associated with multiple distribution layers. But in some markets, agencies—such as music labels or publishers—may still be crucially important. For example, these agencies have a vital role in signaling quality and facilitating discovery. Their reputations serve as a shortcut for consumers navigating the overwhelming options available on digital platforms. But the question remains: how do agency reputations benefit creators and how do their potential benefits also depend on the reputations of the creators themselves?
[R]eputable agencies provide greater benefits to less reputable creators, while less reputable agencies can actively harm the success of more reputable creators.
In our recent study in MIS Quarterly, we address this question of reputation spillovers, a phenomenon where the reputation of one party (an agency) influences perceptions of another (a creator). The results reveal a nuanced and asymmetric picture: reputable agencies provide greater benefits to less reputable creators, while less reputable agencies can actively harm the success of more reputable creators.
Unpacking Reputation Spillovers
Reputation spillovers are not new. Consumers have long relied on trusted intermediaries to guide their choices in traditional markets. Digital platforms, however, complicate this dynamic. The vast selection of products and creators creates a “long tail” of offerings, leaving consumers reliant on signals such as reviews, ratings, and reputations. Agencies enter this space as trusted curators, but their effects are far from uniform.
We examined these effects on a platform for independent musicians, which allowed us a rich dataset of over 1.5 million songs created by 139,000 musicians and promoted by 31,000 agencies. We explored how agency reputation influences product success.
What did we find? Collaborating with a reputable agency increases the likelihood of a song entering the platform’s top charts by 9%. However, the benefits are not evenly distributed. Less reputable creators experience the most significant gains from reputable agency partnerships, while more reputable creators see only marginal improvements.
This asymmetry indicates that reputation spillovers amplify or diminish perceived value depending on the reputations of both the creator and the agency.
The dynamics are even more stark when less reputable agencies are involved. The effects for less reputable agencies are disproportionately worse for more reputable creators; an association with a poorly regarded intermediary may signal lower quality to consumers or a damaged good that a more reputable agency avoided. This asymmetry indicates that reputation spillovers amplify or diminish perceived value depending on the reputations of both the creator and the agency.
Theoretical Insights and Broader Implications
These findings extend traditional cognitive theories of consumer behavior, particularly expectation disconfirmation. Consumers form expectations based on both agency and creator reputations, and unexpected pairings—such as a highly reputable creator working with a poorly reputed agency—can lead to negative evaluations. This study is among the first to apply these theories to pre-purchase decisions in digital platforms, helping us better understand how consumers navigate reputation signals in crowded, information-rich environments.
The implications of this work reach beyond academic theory. For platform managers, the importance of integrating agency reputation into algorithms for rankings and recommendations. Platforms that account for these reputational dynamics can better match consumers with products and promote marketplace diversity.
Creators, meanwhile, must navigate their collaborations strategically. For those just starting, partnering with a reputable agency can provide a much-needed boost in visibility—if these new creators can get the attention of reputable agencies. However, established creators should tread carefully when considering partnerships with less reputable agencies to, for example, reduces costs. These collaborations may be beneficial only in short term savings but entail long term costs to their hard-earned reputations.
A Nuanced Role for Agencies
Our findings underscore agencies’ pivotal but uneven role in digital marketplaces. While agencies link creators and consumers, their effects are not uniform. Instead, the effects depend on the interaction between their reputation and the reputations of the creators they represent. This asymmetry highlights the enduring importance of reputation in shaping market outcomes, even as platforms evolve to reduce traditional frictions.
We all only have 24 hours per day. When content is abundant, but attention is scarce, reputation remains a powerful currency.
Understanding these dynamics will be crucial for creators, platforms, and policymakers as digital markets continue to grow and diversify. Future research might explore how these effects play out over longer-term collaborations or other contexts, such as online labor markets or e-commerce platforms.
We all only have 24 hours per day. When content is abundant, but attention is scarce, reputation remains a powerful currency. Our study illuminates how this currency flows and, more importantly, how consumers can spend attention wisely.
This blog is based on Sam, Marios, and Panos’ research, which is published in MIS Quarterly and is included in the Platform Papers references dashboard:
Kokkodis, M., Adamopoulos, P., & Ransbotham, S. (2023). Reputation Spillover From Agencies on Online Platforms: Evidence from the Entertainment Inudstry. MIS Quarterly, 47(2), 733-770.
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