Recommended for you: The effect of word of mouth on sales concentration

I examine the role of word of mouth in consumer's product discovery process and its implications for the firm. A monopolist supplies an assortment of horizontally differentiated products and consumers search for a product that matches their taste by sampling products from the assortment or by seeking product recommendations from other consumers. I analyze the underlying consumer interactions that lead to the emergence of word of mouth, examine the optimal pricing and assortment strategy of the firm, and explain the impact of word of mouth on the concentration of sales within the assortment. The model provides a rationale for the long tail phenomenon, explains recent empirical findings in online retail, and is well suited for product categories such as music, film, books, and video game entertainment

Peer-to-Peer File Sharing and Cultural Trade Protectionism

We examine the Internet’s impact on the cross-border distribution of cultural goods and assess its implications for cultural policy and cultural diversity. We present a stylized model of a two-country economy where governments are endowed with political preferences over the consumption of domestic content and enact import barriers and subsidies to protect it. We introduce peer-to-peer file sharing as a distinct distribution channel enabled by the Internet that provides access to all media products at a low cost. We report two main findings. First, the Internet renders legacy cultural policy inefficient, and the elimination of import barriers and the reduction of subsidized production can be desirable even when governments exhibit paternalistic preferences favoring the consumption of domestic content. And second, even though the Internet increases cultural diversity within countries, it can also reduce diversity across them

Competing against online sharing

Purpose – This paper aims to explore online sharing of copyrighted content over peer‐to‐peer (p2p) file sharing networks and its impact on the music industry, and to assess the viable business models for the industry in the future. Design/methodology/approach – The authors analyze the evolution of the online content market over the years that followed the widespread adoption of p2p. The paper is based on a teaching case, and builds on two related academic papers that provide the theoretical underpinnings for the analysis. Findings – Based on the early developments observed in this marketplace and the aforementioned theoretical work, the paper argues that it is unfeasible to fully eradicate p2p, and so the industry must embrace it by understanding how consumers derive value from the technologies that enable it. Originality/value – The developments analyzed here offer relevant insights for the online content marketplace, allow the scope of strategies available to the music industry to be understood better, and may provide lessons for other industries transitioning to online business models

Business model responses to digital piracy

Digital piracy challenges firms by reducing revenues and shifting consumption habits. Recently, some firms have successfully leveraged business models against piracy, but the understanding about this phenomenon still lacks depth and structure. This study examines the characteristics of digital piracy in some of the most affected industries, presents comparative case studies of two iconic firms, Spotify and Netflix, and analyzes their digital business model responses. We generalize their adoption to generic digital content distributors and explain how they contribute to generate and capture value. Theoretical and practical implications for technological innovation, firm diversification, and network competition are also discussed

Strategies for managing the privacy landscape

Firms use consumer personal information to improve their products and services. Personal information is open to misuse, however, and when exploited for undesired or unexpected purposes reduces consumer's trust in the firm and their willingness to provide personal information. How should firms manage consumer privacy? We present a framework to help firms identify their privacy impact on consumers and respond appropriately. We argue that firms should consider the full spectrum of entities they interact with and which can exploit consumer personal information, which includes: the political environment (government), the security environment (hackers), the market environment (third party firms), and the social environment (peers). Firms should pursue strategies to maximize the privacy impact consumers derive across these domains, augmenting sources of positive impact and mitigating those that generate negative impact. Successful strategies for managing privacy combine four approaches: balanced cooperation with government, heightened security against hackers, limited disclosure to third party firms, and moderated propagation with peers

Dixdc1 Is a Critical Regulator of DISC1 and Embryonic Cortical Development

The psychiatric illness risk gene Disrupted in Schizophrenia-1 (DISC1) plays an important role in brain development; however, it is unclear how DISC1 is regulated during cortical development. Here, we report that DISC1 is regulated during embryonic neural progenitor proliferation and neuronal migration through an interaction with DIX domain containing-1 (Dixdc1), the third mammalian gene discovered to contain a Disheveled-Axin (DIX) domain. We determined that Dixdc1 functionally interacts with DISC1 to regulate neural progenitor proliferation by co-modulating Wnt-GSK3β/β-catenin signaling. However, DISC1 and Dixdc1 do not regulate migration via this pathway. During neuronal migration, we discovered that phosphorylation of Dixdc1 by cyclin-dependent kinase 5 (Cdk5) facilitates its interaction with the DISC1-binding partner Ndel1. Furthermore, Dixdc1 phosphorylation and its interaction with DISC1/Ndel1 in vivo is required for neuronal migration. Together, these data reveal that Dixdc1 integrates DISC1 into Wnt-GSK3β/β-catenin-dependent and -independent signaling pathways during cortical development and further delineate how DISC1 contributes to neuropsychiatric disorders.Human Frontier Science Program (Strasbourg, France) (Long-Term Fellowship)Natural Sciences and Engineering Research Council of Canada (Postdoctoral Fellowship)National Alliance for Research on Schizophrenia and Depression (U.S.) (Young Investigator Award)National Institutes of Health (U.S.) (Grant NS37007