Platforms and the transformation of the content industries

This paper discusses how digitization and the associated emergence of distribution platforms have affected product discovery, as well as new opportunities, in the content industries. First, we describe the traditional ways in which content creators reached consumers, as well as how platforms have transformed the product discovery process. Second, we present the promise and challenges of the information aggregation role that platforms perform, with discussions of both the positive effects of platform‐collected product ratings, as well as the prevalence and implications of misleading information. Third, we describe the promise and challenges arising from platform curation and product recommendations, with a focus on the measurements of platform power as well as possible biases in platform product recommendations. Finally, we discuss how platforms may affect which sorts of products are produced in the first place

Does Amazon Exercise Its Market Power? Evidence from Toys“R”Us

Since its founding, Amazon has established a reputation for being consumer friendly by consistently offering lower prices than its market position would seem to allow. However, recent antitrust concerns about dominant online platforms have revived questions about whether Amazon’s growing market share threatens consumer welfare. Given its reputation, regulators have proposed a new focus on conduct unrelated to prices. We ask whether such a move is premature. Using the sudden and unanticipated US exit of Toys“R”Us as a natural experiment, we find that Amazon’s toy prices on its US site increased by almost 5 percent in the wake of the exit relative to similar products and to toys on its Canadian site. Thus, despite Amazon’s long-standing reputation, it may exploit increases in market power in traditional ways as competing retailers cease operating

Visibility of technology and cumulative innovation: evidence from trade secrets laws

We use exogenous variation in the strength of trade secrets protection to show that a relative weakening of patents (compared to trade secrets) has a disproportionately negative effect on the disclosure of processes – inventions that are not otherwise visible to society. We develop a structural model of initial and follow-on innovation to determine the effects of such a shift in disclosure on overall welfare in industries characterized by cumulative innovation. We find that while stronger trade secrets encourage investment in R&D, they may have negative e�ects on overall welfare – the result of a significant decline in follow-on innovation

Copyright and Generic Entry in Book Publishing

Taking works off copyright promotes their availability, but it also allows generic entry to dissipate producer surplus. This paper examines the effect of a copyright on the availability and price of books when incentives to create new works are not affected. Evaluating the welfare impact of the 1998 Copyright Term Extension Act, I find that a copyright significantly limits the availability of works, leading to a decrease in consumer surplus, which is significantly larger than any increases in profits to copyright holders. Without changing incentives to create new content, the copyright extension was economically inefficient. (JEL L11, L17, L82, O34) </jats:p

Can Private Copyright Protection Be Effective? Evidence from Book Publishing

Digitization has impacted publishing, news, and entertainment industries in recent years by lowering the cost of access. With the option to download creative works legally, however, come the possibility of doing so illegally and the issue of how to protect copyrighted works effectively. Public (legislative) and formal (legal) efforts to prevent copyright infringements have been controversial or inefficient. The book industry showcases an alternative approach in which private companies use relatively inexpensive network surveillance to protect individual titles. I estimate the effectiveness of such protection on legal sales of books that become protected using a difference-in-differences approach. I find a protection-related increase in sales of electronic books—the closest substitute for online piracy—of more than 14 percent, with effectiveness depending on popularity, genre, and search frequency. Most of the increase is due to prevention of casual infringements rather than professional piracy

Can Private Copyright Protection Be Effective? Evidence from Book Publishing

Digitization has impacted publishing, news, and entertainment industries in recent years by lowering the cost of access. With the option to download creative works legally, however, come the possibility of doing so illegally and the issue of how to protect copyrighted works effectively. Public (legislative) and formal (legal) efforts to prevent copyright infringements have been controversial or inefficient. The book industry showcases an alternative approach in which private companies use relatively inexpensive network surveillance to protect individual titles. I estimate the effectiveness of such protection on legal sales of books that become protected using a difference-in-differences approach. I find a protection-related increase in sales of electronic books—the closest substitute for online piracy—of more than 14 percent, with effectiveness depending on popularity, genre, and search frequency. Most of the increase is due to prevention of casual infringements rather than professional piracy

Can Private Copyright Protection Be Effective? Evidence from Book Publishing

Digitization has impacted publishing, news, and entertainment industries in recent years by lowering the cost of access. With the option to download creative works legally, however, come the possibility of doing so illegally and the issue of how to protect copyrighted works effectively. Public (legislative) and formal (legal) efforts to prevent copyright infringements have been controversial or inefficient. The book industry showcases an alternative approach in which private companies use relatively inexpensive network surveillance to protect individual titles. I estimate the effectiveness of such protection on legal sales of books that become protected using a difference-in-differences approach. I find a protection-related increase in sales of electronic books—the closest substitute for online piracy—of more than 14 percent, with effectiveness depending on popularity, genre, and search frequency. Most of the increase is due to prevention of casual infringements rather than professional piracy

Essays on market effects in the publishing industry

University of Minnesota Ph.D. dissertation. August 2013. Major: Economics. Advisors: Thomas Holmes and Amil Petrin. 1 computer file (PDF); x, 93 pages, appendices A-B.This thesis is composed of two separate essays about the market effects of different events in the book publishing industry. In the first essay, I study the effects of a copyright extension on the book publishing industry. The 1998 Sonny Bono Act extended copyright by 20 years so that works created in 1922 and before are in the public domain while works created later remain on copyright. Taking works off copyright tends to promote their availability which benefits consumers. But it also allows entry to dissipate producer surplus, particularly for high-value works. Many copyright-protected books, especially those of low value, have gone out of print, and are effectively unavailable to consumers. Putting these works in the public domain can raise the welfare of both producers and consumers. Evaluating the welfare impact of the copyright extension requires estimation of the differences in consumer and producer surplus across a wide range of books between actual and counterfactual copyright regimes. I assess these differences using a structural model of demand for books, along with an entry model, to simulate the elimination of copyright for books published after 1923. I find that a copyright extension decreases welfare by decreasing variety, causing a decrease in consumer surplus that outweighs an increase in producer surplus. Holding fixed the costs of entry, a move into the public domain increases total surplus from most titles, indicating insufficient entry under copyright protection. In the second chapter, I present joint work with Joel Waldfogel wherein we analyse the market effects of new technology - namely e-books - on the book publishing industry. Digitization is transforming the market for books. Lower marginal costs have reduced prices by 10-15 percent in the past four years, and digitization has given creators the ability to circumvent traditional gatekeepers and publish their work directly. The number of self-published works has grown by almost 300 percent since 2006 and now exceeds the number of traditionally published works. Given the inherent difficulty in predicting the ex post appeal of creative products at the time of investment, a growth in available new products can substantially expand the appeal of available products. While e-book data are not systematically available, we are able to document that falling prices have increased consumer surplus by \$2-3 billion per year. Using bestseller lists in conjunction with title-level data on physical sales and our best estimates of e-book sales, we document that many self-published books have substantial ex post appeal to consumers. Works that began their commercial lives through self-publishing began to appear on bestseller lists in 2011 and by late 2012 such works accounted for a tenth of both bestseller listings and estimated unit sales. In romantic fiction, self-published works account for almost a third. These changes challenge the role of gatekeepers while benefiting consumers