External technology supply and client-side innovation

Flexibility in response to competitive pressure from globalized markets and increasingly individualized customer desires has become vital for firms. A common strategy to address this challenge is to employ a dynamic concept of organization and reach beyond the boundaries of the firm. Accordingly, technology transfer from providers of knowledge intensive business services attracts more and more attention. In this context we focus on external supply of information technology and client-side innovation. The aim of this paper is to contribute to resolving an empirical puzzle arising from the prior literature. Some authors find beneficial effects of IT outsourcing, others underline that firms often fail to achieve expected strategic goals. Our stylized theoretical model combines a knowledge production function framework and transaction cost economics. We hypothesize that the right balance between internal and external knowledge is critical for innovation. The empirical application is German firm-level data covering a wide range of industries from 2003 to 2006. Our results largely support the theoretical arguments and suggest a positive linear relationship between the level of outsourcing and process innovation. For product innovation we find a hump-shape. --knowledge production function,transaction cost economics,product innovation,process innovation,KIBS,IT outsourcing,ZEW ICT survey

The risks of risk-based AI regulation: taking liability seriously

The development and regulation of multi-purpose, large "foundation models" of AI seems to have reached a critical stage, with major investments and new applications announced every other day. Some experts are calling for a moratorium on the training of AI systems more powerful than GPT-4. Legislators globally compete to set the blueprint for a new regulatory regime. This paper analyses the most advanced legal proposal, the European Union's AI Act currently in the stage of final "trilogue" negotiations between the EU institutions. This legislation will likely have extra-territorial implications, sometimes called "the Brussels effect". It also constitutes a radical departure from conventional information and communications technology policy by regulating AI ex-ante through a risk-based approach that seeks to prevent certain harmful outcomes based on product safety principles. We offer a review and critique, specifically discussing the AI Act's problematic obligations regarding data quality and human oversight. Our proposal is to take liability seriously as the key regulatory mechanism. This signals to industry that if a breach of law occurs, firms are required to know in particular what their inputs were and how to retrain the system to remedy the breach. Moreover, we suggest differentiating between endogenous and exogenous sources of potential harm, which can be mitigated by carefully allocating liability between developers and deployers of AI technology

Video killed the radio star? Online music videos and digital music sales

Sampling poses an interesting problem in markets with experience goods. Free samples reveal product quality and help consumers to make informed purchase decisions (promotional effect). However, sampling may also induce consumers to substitute purchases with free consumption (displacement effect). We study this trade-o_ in the market for digital music where consumers can sample the quality of songs by watching free music videos online. Identification comes from a natural experiment in Germany, where virtually all videos that contain music are blocked on a popular video platform due to a legal dispute with representatives of the rights-holders. We show that promotional and displacement effects cancel out in the sales performance of individual songs, whereas online music videos trigger sales of albums

Catch Me if You Can: Effectiveness and Consequences of Online Copyright Enforcement

Taking down copyright-infringing websites is a way to reduce consumption of pirated media content and increase licensed consumption. We analyze the consequences of the shutdown of the most popular German video streaming website - kino.to - in June 2011. Using individual-level clickstream data, we find that the shutdown led to significant but short-lived declines in piracy levels. The existence of alternative sources of unlicensed consumption, coupled with the rapid emergence of new platforms, led the streaming piracy market to quickly recover from the intervention and to limited substitution into licensed consumption. Our results therefore present evidence of a high elasticity of supply in the online movie piracy market, together with relatively low switching costs for users of copyright infringing platforms. The fact that the post-shutdown market structure was much more fragmented - and therefore more resistant to future interventions - further questions the effectiveness of the intervention

Catch me if you can: effectiveness and consequences of online copyright enforcement

We evaluate the unexpected shutdown of kino.to, a major platform for unlicensed video streaming in the German market. Using highly disaggregated clickstream data in a difference-in-differences setting, we compare the web behavior of 20,000 consumers in Germany and three control countries. We find that this intervention was not very effective in reducing unlicensed consumption or encouraging licensed consumption, mainly because users quickly switch to alternative unlicensed sites. We highlight that the shutdown additionally had important unintended externalities. Individuals who never visited kino.to and who additionally clicked on news articles that covered the shutdown increased their visits to piracy websites substantially. We show that this effect largely comes from articles that explicitly mention alternative websites or suggest that users do not have to fear legal consequences from unlicensed streaming. Finally, we document that the unlicensed video streaming market is much more fragmented after the shutdown, potentially affecting future interventions, at least in the short run.We argue that our results can be helpful to understand why online piracy rates are still high, despite a plethora of enforcement efforts.info:eu-repo/semantics/acceptedVersio

Catch Me If You Can: Effectiveness and Consequences of Online Copyright Enforcement

We evaluate the unexpected shutdown of kino.to, a major platform for unlicensed video streaming in the German market. Using highly disaggregated clickstream data in a difference-in-differences setting, we compare the web behavior of 20,000 consumers in Germany and three control countries. We find that this intervention was not very effective in reducing unlicensed consumption or encouraging licensed consumption, mainly because users quickly switch to alternative unlicensed sites. We highlight that the shutdown additionally had important unintended externalities. Individuals who never visited kino.to and who additionally clicked on news articles that covered the shutdown increased their visits to piracy websites substantially. We show that this effect largely comes from articles that explicitly mention alternative websites or suggest that users do not have to fear legal consequences from unlicensed streaming. Finally, we document that the unlicensed video streaming market is much more fragmented after the shutdown, potentially affecting future interventions, at least in the short run. We argue that our results can be helpful to understand why online piracy rates are still high, despite a plethora of enforcement efforts

Typing the Future: Designing Multimodal AR Keyboards

Recent demonstrations of AR showcase engaging spatial features while avoiding text input. However, this is not due to descending relevance but rather because no satisfactory solution to text input in a comprehensive AR system is available yet. Any novel technological device requires rethinking the way we interact with it, including text input. With its variety of sensors, AR devices offer numerous possibilities for uni- and multimodal interaction. However, it is essential to evaluate the actual problem space before suggesting solutions. In our design science research project, we aim to create design knowledge about the learnability and performance of AR keyboards. Based on transfer of learning theory and HCI literature on virtual keyboards, we propose meta requirements and initial design principles that serve as basis for developing a multimodal AR keyboard prototype

Piracy and Movie Revenues: Evidence from Megaupload. A Tale of the Long Tail?

In this paper we make use of a quasi-experiment in the market for illegal downloading to study movie box office revenues. Exogenous variation comes from the unexpected shutdown of the popular file hosting platform Megaupload.com on January 19, 2012. The estimation strategy is based on a quasi difference-in-differences approach. We compare box office revenues before and after the shutdown to a matched control group of movies unaffected by the shutdown. We find that the shutdown had a negative, yet insignificant effect on box office revenues.This counterintuitive result may suggest support for the theoretical perspective of (social) network effects where file-sharing acts as a mechanism to spread information about a good from consumers with zero or low willingness to pay to users with high willingness to pay