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Supply Responses to Digital Distribution: Recorded Music and Live Performances
Abstract
Changes in technologies for reproducing and redistributing digital goods (e.g., music, movies, software, books) have dramatically affected profitability of these goods, and raised concerns for future development of socially valuable digital products. However, broader illegitimate distribution of digital goods may have offsetting demand implications for legitimate sales of complementary non-digital products. We examine the negative impact of file-sharing on recorded music sales and offsetting implications for live concert performances. We find that file-sharing reduces album sales but increases live performance revenues for small artists, perhaps through increased awareness. The impact on live performance revenues for large, well-known artists is negligible.
... 7 Alternatively, the rise of social media could be a way for artists to identify fan clusters ( Cho, Hwang and Park, 2018 ). 8 See Gayer and Shy (2006) , Dewenter et al. (2012) , Piolatto and Schuett (2012) , and Curien and Moreau (2009) , among others. 9 For consumer surveys see Nguyen, Dejean and Moreau (2014) ; Jin and Oh (2019) ; Montoro-Pons and Cuadrado-García (2011) ; for artist surveys see Bacache-Beauvallet, Bourreau and Moreau (2015) ; Aly-Tovar, Bacache-Beauvallet, Bourreau and Moreau (2019) ; for consumer behavior and sales data see Mortimer, Nosko and Sorensen (2012) ; Papies and van Heerde (2017) . 10 The importance of linking is captured in the following line from the CEO of Warner Music Group, Edgar Bronfman, Jr., in the opening letter of the 2009 Warner Annual Report. ...
... The on-demand and interactive nature of many streaming services have made this nostalgic listening easier. Mortimer, Nosko and Sorensen (2012) provide some evidence that digitization stimulated demand for concerts. They find that the growth rate in US concert revenue for a given rank is higher after the 1999 launch of Napster, a file sharing service. ...
... Empirically, this paper updates the environment in Mortimer et al. (2012) from illegal file sharing around 1999 to legal streaming around 2009. The fact that the results are broadly consistent lends additional credence to the claim that digitization has stimulated the demand for live concerts. ...
The removal of Warner Music content from YouTube in the first three quarters of 2009 constitutes a plausible natural experiment to investigate the impact of streaming on live concert sales. This Warner-YouTube blackout had statistically and economically negative effects on Warner artists relative to non-Warner artists. Specifically, relative revenues and prices were lower and relative attendance was not higher. These effects were stronger among artists who recently had a song in the Billboard Hot 100 and among those who were more frequently searched on YouTube just prior to the blackout. These findings suggest that the diffusion of streaming has stimulated the demand for live concerts. The evidence is also consistent with a differentiated Bertrand model of ticket pricing in which prices are strategic complements and prices and streaming penetration gives rise to increasing differences in the artist profit function. This suggests that concerts and streaming are complements in demand for a given artist, and that concerts by different artists are substitutes. More broadly, the paper is an example of how the results from the monotone comparative statics literature can be adapted for use with difference-in-differences estimation.
... This is mainly because in these industries, online and offline sales are competitive and substituted (Wang and Goldfarb 2017). Conversely, some studies suggest that online sales can stimulate offline sales for media (Mortimer et al., 2012;Cho et al., 2018) and books (Hilton and Wiley 2010;Chen et al., 2019). The reason may be that e-channel sales can attract new customers. ...
... Among the various effects of online on offline channels, this paper especially related to the literature that studies the effect of online-tooffline sales. Much literature indicates that this effect may be cannibilizated or stimulated (Goolsbee 2001;Forman et al., 2009;Smith and Telang 2010;Mortimer et al., 2012;Chen et al., 2019). Research in this area begins with empirical research. ...
... The work is extended by Forman et al. (2009) who empirically complement that offline transportation cost can influence the cannibilization of online sales on offline sales. Contrarily, Smith and Telang (2010) empirically unveil that internet music significantly and positively impacts DVD sales due to the broadband Internet penetration, and Mortimer et al. (2012) uncover that online media increases demand of concerts given that file sharing boosts the awareness of small artists. Subsequently, some studies extend these by adding negative and positive spillovers to an analytical model to explore their effect on operation decision. ...
With the rapid development of online retail, many manufacturers selling through offline channels have also ventured into online selling. However, much literature indicates that these omnichannel sales, relative to single-channel sales, will lead to a cross-channel spillovers, that is, the stimulation or cannibalization effect of online sales on offline sales. This paper studies the spillover effect on the price and quality decisions of competing manufacturers and how these manufacturers initially respond to the cross-channel spillovers by adjusting product strategies. In the model, an incumbent already sells product in online market and an entrant entering the market with its higher-quality product. Meanwhile, firms may have been selling through their respective offline channels. Results indicate that although the positive spillover of online sales stimulates offline sales, it strengthens online competition by reducing the equilibrium prices. Moreover, a spillover can enhance or reduce the entrant's quality level. Taking positive spillover for example, a firm prefers to enhance its product quality when its spillover is significantly smaller than its competitor's or when its spillover is slightly larger but its product quality improvement is limited. Moreover, we find that the entrant's (incumbent's) quality improvement can alleviate (strengthen) the effect of a spillover, which provides firms useful insights into managing spillovers.
... The on-demand and interactive nature of many streaming services have made this nostalgic listening easier. Mortimer, Nosko and Sorensen (2012) provide some evidence that digitization stimulated demand for concerts. They find that the growth rate in US concert revenue for a given rank is higher after the 1999 launch of Napster, a file sharing service. ...
... Empirically, this paper updates the environment in Mortimer et al. (2012) from illegal file sharing around 1999 to legal streaming around 2009. The fact that the results are broadly Cuadrado-García (2011); for artist surveys see Bacache-Beauvallet, Bourreau and Moreau (2015); Aly-Tovar, Bacache-Beauvallet, Bourreau and Moreau (2019); for consumer behavior and sales data see Mortimer, Nosko and Sorensen (2012); Papies and van Heerde (2017). ...
... Empirically, this paper updates the environment in Mortimer et al. (2012) from illegal file sharing around 1999 to legal streaming around 2009. The fact that the results are broadly Cuadrado-García (2011); for artist surveys see Bacache-Beauvallet, Bourreau and Moreau (2015); Aly-Tovar, Bacache-Beauvallet, Bourreau and Moreau (2019); for consumer behavior and sales data see Mortimer, Nosko and Sorensen (2012); Papies and van Heerde (2017). 9 The importance of linking is captured in the following line from the CEO of Warner Music Group, Edgar Bronfman, Jr., in the opening letter of the 2009 Warner Annual Report. ...
... This is not an ideal approach since the introduction took place all over the world simultaneously and it coincided with other technological advances that affected the music industry, limiting most of the analyses to 'before-after' comparisons. Mortimer et al. (2012) rank artists according to revenue and find lower negative growth on recorded music sales for lower ranked artists following the introduction of Napster, as well as a more positive effect on revenues from live concerts. Waldfogel (2012Waldfogel ( , 2015 finds that quality of supplied music is stable or increasing and that artists signed to independent record labels reach the (top of the) charts more frequently after 1999. ...
... The same equation can be used to estimate how the introduction of HADOPI affected the distribution of sales. Similar to Mortimer et al. (2012) , we rank the songs in the dataset in different cohorts, such that the highest selling songs are in the first cohort and every next cohort consists of songs with lower sales, and run regression (1) for each cohort 6 separately. Since each cohort groups music items according to their rank, this allows us to estimate the differential effect of the HADOPI law for music items with different positions in the sales distribution. ...
... Firstly, we are not taking into account revenues from live performances of music. In the context of broader digitization, Mortimer et al. (2012) found that concert revenues for lower ranked artists are increasing. It is possible that piracy plays a role in this. ...
This paper estimates the causal effect of illegal downloading on recorded music sales volumes. We explicitly allow for differing effects of piracy on superstars versus other songs (i.e. songs or artists that are respectively ranked at the top or lower in the sales distribution), with an extension about product variety. We use a difference-in-difference approach, exploiting the natural experiment of the introduction of the HADOPI anti-piracy law in France in 2009, using Belgium and the Netherlands as a control group. We find a positive effect on music sales after the introduction of the law, thus implying a negative effect of music piracy. The effect is greater for top selling songs compared to lower ranked songs. It is stronger shortly after the introduction of the law and diminishes in later periods for all songs except the top sellers or superstars. After the introduction of the law, consumption became more concentrated in terms of musical genre and style, indicating that piracy increases consumed product variety.
... In general, this line of research underscores the connection of media-based consumption with the increased demand for live performances. Mortimer et al. (2012) find a positive effect of file-sharing on live music (an effect that is more pronounced for smaller artists who see a relatively larger rise in awareness). Moreover, Nguyen et al. (2014) show that free music streaming affects positively live attendance. ...
... Theoretically, the expected conditional effect is ambiguous. As noted in the literature review, evidence has been found of spillovers from file-sharing to live demand being stronger for less successful artists, as they could benefit most from the raised awareness (Mortimer et al. 2012). Alternatively, one might argue that most popular performers should create more buzz and therefore generate more online activity generated after a performance. ...
This paper finds evidence of spillover effects from playing live to YouTube video streaming using a regression discontinuity design. In addition there is evidence of a gender-specific effect: female performers experience a greater increase in YouTube searches. Though exploratory, this gender bias is consistent with potential theoretical explanations to be further analysed. Overall, findings provide causal evidence of the effect of live performances on a related but different market (i.e., recorded music), which underlines how technological disruptions may enable alternative revenue sources for musicians.
... According to Waldfogel (2012), the distribution of the song at zero marginal costs would make concerts a more and more important business model for the industry (Waldfogel, 2012). The idea extended by Mortimer et al. (2012) shows that file-sharing has a positive but differential influence on the demand for live concerts, while it has also an adverse influence on music recordings sales. Especially, they further disclose that the file-sharing impact is greater for lower-rated artists than for top-rated artists (Mortimer et al., 2012). ...
... The idea extended by Mortimer et al. (2012) shows that file-sharing has a positive but differential influence on the demand for live concerts, while it has also an adverse influence on music recordings sales. Especially, they further disclose that the file-sharing impact is greater for lower-rated artists than for top-rated artists (Mortimer et al., 2012). "These changes in the music industry initiated by a resurgence of the live music industry are giving rise to some expectations for the survival, growth, and sustainability of the music industry" (Naveed et al., 2017). ...
The global live music industry has become a significant income resource for national economies and artists associated with the music industry. Unfortunately, the live music industry could not contribute to the national economy and support artists in Pakistan due to certain factors. This study was carried out to investigate the influences of factors such as societal discrimination (SD) and lack of government support (LGS) on the live music industry in Pakistan. The online questionnaire was designed to collect data and collected data from 203 artists was analysed by employing SPSS techniques. The results of this study showed that both factors had an adverse impact on the live music industry.
... Moreover, this discovery process does not only foster the increase of future audience in the recorded music market (for the next albums for instance) but can also have a short run effect on ancillary markets for which recorded music generates a positive externality. The most important of these ancillary markets is the live music market which has benefited from the digitization of music (Mortimer et al., 2012;Bacache-Beauvallet et al., 2015), notably through free streaming . Hence, our second hypothesis: ...
... Recorded music is known to generate a positive externality on the live music market(Mortimer et al., 2012). Hence, artists who yield the main part of their revenues from touring are more tolerant towards free streaming. ...
The emergence of streaming has provided a general change on how different products are consumed around the world. These changes relate not only to the consumption of these goods but also to the business models, the international trade of these goods and how the producers of such goods perceive the new technologies. To understand these effects the author has focused his research around the music industry that seems to be the best example of how streaming has changed the consumption, production, and other parts of the industry as a whole. For this the author starts by analyzing how the rise of the digital era and smartphones have dramatically changed the economic landscape of cultural goods. The music industry and record labels were one of the first to be exposed to the consequences of digitization. To understand the effects of streaming researchers have explored this technology in different mediums. In this sense the present paper does a survey of the literature created around this subject.Meanwhile streaming services are becoming the dominant way to consume recorded music, professional musicians remain divided in their opinion toward streaming, especially towards free (ad-supported) services that generate very low royalties. This paper is one of the first attempts to analyze empirically what are the factors that drive the artists' opinion on free streaming. Using survey data from more than 1,100 French professional musicians, we emphasize that four main determinants affect the opinion of artists on free-streaming beyond their individual preferences: (i) free-streaming stands as a discovery tool that helps consumers to explore the music catalog beyond stars and already well-known artists; (ii) free-streaming generates a positive externality on the live music market; (iii) the contractual situation of the artist also matters, since the biggest recording companies obtain much more favorable conditions in revenue sharing from streaming services; (iv) the opinion of artists is also shaped by the evolution of consumption behavior of their fans.To understand how the business model of the streaming platforms work the author analyzes the pricing of information goods and how it is a difficult task. Usually given their almost zero marginal cost they are offered in a bundle for a flat rate. This is a clear characteristic in the case of music streaming platforms. Still, price discrimination could be applicable by pricing different bundles to different prices and inducing individuals to self identify and chose the bundle tied to their class of consumer. In other words, platforms could find ways to do a second degree price discrimination. We examine the effects in profits of applying such an scheme and the possible conflicts arising from it.Finally the author studies the implications around trade through the use of the gravity model which is the workhorse of international trade, it has been used to explain the bilateral trade-flows of goods between different countries. This model has been used also in various occasions to explain the international trade of cultural goods, this has been done by adding different measures of cultural distance, history and others. We use a novel data set of the top 200 streamed songs in Spotify of more than 40 countries during almost two years to evaluate with a variant of the gravity model the bilateral trade-flows of music between different countries
... Looking at local citations (table 6) the diversity of backgrounds and topics recedes, with seven of the top-ten papers within the scope of economics. As for diversity of topics, all ten papers are linked to piracy or the assessment of its impact on music markets (Bhattacharjee et al., 2007(Bhattacharjee et al., , 2006bLiebowitz, 2008;Mortimer et al., 2012;Peitz & Waelbroeck, 2006a,b). ...
... This is particularly surprising as live music has become the most relevant source of income for musicians worldwide. 6 Some influential papers have underscored the connection of media-based consumption with the demand for live performances (Mortimer et al., 2012;Nguyen et al., 2014;Papies & van Heerde, 2017). Still, an in-depth analysis should acknowledge that the demand for live music exceeds the demand for music itself, something which calls for a broader scope in the analysis to include unexplored issues regarding live music consumer behavior, such as customer experience, immersion or loyalty in live performances. ...
The last two decades have witnessed an increasing scholarly interest on music consumption. This interest can be explained, at least partly, to the relevance of music as a form of cultural consumption and the profound changes the sector has undergone. This paper performs a bibliometric analysis of the literature on music consumption research. In doing so, a database comprising 455 academic documents on the fields of business, economics, and management, was reviewed following a systematic procedure. Through it we identify the intellectual roots and the methodological evolution of the field. Furthermore, text mining was applied to analyse the themes included in the research agenda and their evolution. As a result, potential topics, approaches, and methods for future music consumption research are proposed.
... Moreover, this discovery process does not only foster the increase in future audience in the recorded music market (for the next albums for instance) but can also have a short-run effect on ancillary markets for which recorded music generates a positive externality. The most important of these ancillary markets is the live music market which has benefited from the digitization of music (Mortimer et al. 2012;Bacache-Beauvallet et al. 2015), notably through free streaming (Dang-Nguyen et al. 2014). Hence, our second hypothesis: ...
... Secondly, we emphasize that taking into account, the business model of an artist is also relevant to understand his/her opinion on free streaming. Recorded music is known to generate a positive externality on the live music market (Mortimer et al. 2012). Hence, artists who yield the main part of their revenues from touring are more tolerant toward free streaming. ...
While streaming services are becoming the dominant way to consume recorded music, professional musicians remain divided in their opinion toward streaming, especially toward free (ad-supported) services that generate very low royalties. This paper is one of the first attempts to analyze empirically the drivers of the artists’ opinion on free streaming. Using survey data from more than 1100 French professional musicians, we emphasize that beyond their individual preferences, four main determinants affect the opinion of artists on free streaming: (1) Free streaming stands as a discovery tool that helps consumers to explore the music catalogue beyond stars and already well-known artists; (2) free streaming generates a positive externality on the live music market; (3) the contractual situation of the artist also matters, since the biggest recording companies obtain much more favorable conditions in revenue sharing from streaming services; (4) the opinion of artists is also shaped by the consumption habits of their fans.
... The most prominent positive effect is known as the sampling effect: consumers are introduced to new music, actors and genres and this creates new demand. Online piracy may also enhance the demand for complementary products such as live concerts and merchandise (e.g., Dewenter, Haucap and Wenzel, 2012;Mortimer, Nosko and Sorensen, 2012) and increase the popularity of content; this is known as the network effect. ...
... Watson, Zizzo and Fleming (2015) mention the long-tail distribution of pirated content, and the net displacement effect may be different further down this tail than in the head of the distribution. Indeed, some studies find indications that more popular musicians and albums (Blackburn, 2004;Mortimer et al., 2012) and blockbuster films (Peukert, Claussen and Kretschmer, 2013) suffer more from the substitution effect, whereas less-well-known productions may even benefit as the opposing sampling effect prevails. ...
We conducted consumer surveys among nearly 35,000 respondents, including over 7,000 minors, in 13 countries in Europe (France, Germany, the Netherlands, Poland, Spain, Sweden), the Americas (Brazil, Canada) and Asia (Hong Kong, Indonesia, Japan, Thailand). The survey deals with the acquisition and consumption of music, films, series, books and games through the various legal and illegal channels that exist nowadays. We find that the percentage of Internet users in Europe that occasionally downloads or streams illegally has decreased between 2014 and 2017 in all European countries except Germany. The decrease is strongest for music, films and series. Meanwhile and despite a decline in physical sales, expenditure on legal content has increased since 2014. It might be tempting to argue that an increase in the use of certain enforcement measures against obviously illegal platforms has contributed to the decreasing number of pirates in Europe. However, a lack of evidence concerning the effectiveness of most enforcement measures and the strong link between piracy and the availability and affordability of content suggests otherwise. At a country level, online piracy correlates remarkably strongly with a lack of purchasing power. Higher per capita income coincides with a lower number of pirates per legal users. Moreover, pirates and legal users are largely the same people: for each content type and country, 95% or more of pirates also consume content legally and their median legal consumption is typically twice that of non-pirating legal users. The study finds statistical evidence that illegal consumption of music, books and games displaces legal consumption but the displacement coefficients are surrounded with substantial uncertainty and separating the results between minors and adults suggests that displacement occurs for adults and not for minors. Using time-structured data for blockbuster films, an average displacement rate was found of –0.46. This translates to a relative sales loss of about 4.1% of all legal blockbuster views.
... Watson et al. (2015) mention the long-tail distribution of pirated content, and the net displacement effect may be different further down this tail than in the head of the distribution. Indeed, some studies find that more popular musicians and albums (Blackburn, 2004;Mortimer et al., 2012) and blockbuster films (Peukert et al., 2017) suffer more from the substitution effect, whereas less-well-known productions may even benefit as the opposing sampling effect prevails (Aly-Tovar et al., 2020). However, other studies find an opposite effect (Bhattacharjee et al., 2007;Hammond, 2014). ...
The COVID-19 pandemic has significantly affected the consumption patterns of cultural goods. Using novel data from a consumer survey conducted in January 2022 across 14 countries, we address two key issues. First, we provide a descriptive analysis of changes in the consumption of four cultural goods—music, films and series, games, and books—focusing on shifts between legal and illegal consumption. Second, we reassess the relationship between digital piracy and legal sales, with a particular emphasis on age differences. Our findings reveal that among those who engaged in illegal consumption during the pandemic, 6–8% were new pirates, primarily individuals who experienced income reductions and increased time at home due to the shift to remote work or schooling. Among adults, these disruptions were linked to a decline in legal sales of music and games. In contrast, the displacement of legal audiovisual consumption was observed only among adults who continued working in person. Minors displayed different patterns: for them, illegal consumption was negatively associated with legal book consumption but positively linked to legal audiovisual consumption.
... The rapid transformation of the music industry and the growing importance of the live music sector have been documented and explained by many scholars (e.g., Frith, 2007;Holt, 2010;Mortimer et al., 2012;Naveed et al., 2017). Nonetheless, detailed analyses of the impact of these changes on conducting business in live music have been scarce, particularly when it comes to perceptions of uncertainty and risk and the strategies required to alleviate them. ...
In this study, we argue that organizers of live music have increasingly been confronted with uncertainty and risk in the pre-pandemic era and that the pandemic has clearly put them under further pressure. At the same time, live music venues and festivals have proven to be largely resilient to the extreme crisis of an ongoing industry lockdown. Also, the sector’s culture of carefully cultivated forms of active (emotive, interrelational) trust to counterbalance these risks has played an important role in the industry’s resilience and its response to both internal and external uncertainties. We base these conclusions on a framework of theories on uncertainty and risk from both business studies and sociology and in-depth interviews with directors of music festivals and venues in the Netherlands, both before the pandemic and after 16months of lockdown. This study aims to (1) gain insight into how live music entrepreneurs perceived and experienced uncertainty and risk within the context of a rapidly changing music industry and a volatile and unpredictable market of concerts and festivals – both before the pandemic and at the eve of re-opening after a 16-month lockdown and (2) understand what strategies these entrepreneurs employ to manage these uncertainties and risks.
... ,Holt (2010) andMortimer et al. (2012). Indeed, a study byEY (2014), which was commissioned by the European Grouping of Societies of Authors and Composers (GESAC), revealed that 50% of the turnover of the music industries in EU countries in 2012 came from this source. ...
... In another research carried out by Wolfgang Mastnak in 2020, he finds there is medical evidence showing that music has a positive influence on the immune system, which can be applied in the treatment in some psychological problems, including pseudo-adjustment and self-abandonment [5]. In short, music plays a significant role in balancing the mood of people during the pandemic, when physical isolation occurs frequently [5,6]. ...
... (2010), Mortimer et al. (2012), and Murillo (2013). The rapid growth of the live music industry in Japan implies this as well. ...
In this study, we analyze that how free goods, such as music video provided freely, affect sales of contents in the Japanese creative industries. The contributions of this study are below three points: (1) we focus on three major creative industries: music industry, video industry, and book industry. (2) We focus on the impact of both licensed and unlicensed free goods. (3) We use a large amount of questionnaire survey data, and then we use unique instrumental variables “Preferences of using free goods on the Internet.” As the results, licensed free goods have a significant positive effect on paid goods in the music industry with an elasticity of 0.11, but no significant effect in the video and book industries. Unlicensed (pirated) free goods have no significant effects in the book industry, but have a significant negative effect in the music and video industries with elasticities of − 0.23 and − 0.19, respectively.
... A positive (negative) cross-channel effect indicates that more online sales promote (decrease) offline channel demand. For instance, in media industries such as movie and music, online channel sales strongly stimulate demand in the offline channel because these online channel sales attract new customers ( Mortimer et al., 2012 ;Smith and Telang, 2010 ;Yan et al., 2019 ). In contrast, in industries such as apparel and computers, online sales can negatively affect offline demand because of channel competition ( Brynjolfsson et al., 2009 ;Goolsbee, 2001 ). ...
We consider a supply chain consisting of a manufacturer and an online platform. The manufacturer produces products under the carbon cap-and-trade policy, and sells them through its own offline channel and the platform, which operates in either the marketplace or reselling mode. While enlarging the potential retail market size through the “platform power”, the platform provides logistics service for the online sales. We also consider the cross-channel effect concerning the impact of online sales on offline demand. The manufacturer can adopt blockchain technology to improve demand forecasting. We study the optimal production, pricing, delivery time decisions, and the coordination problem of the two firms under various scenarios. We compare the optimal decisions of the two firms and the manufacturer’s profits with and without blockchain in each operation mode of the platform. We find that the cross-channel effect and blockchain have significant impacts on the optimal decisions and coordination results. In the marketplace mode, the optimal production quantity increases (decreases) with the commission rate if the cross-channel effect is high (low). The optimal delivery time increases (decreases) with the cross-channel effect and the cap in the marketplace (reselling) mode. The reselling mode can coordinate the manufacturer and platform regardless of whether delivery time or strategic inventory is considered, while the marketplace mode can coordinate the two firms only when delivery time is considered. If the cross-channel effect is low (high) and the platform power is high (low), adopting blockchain can generate more profit for the manufacturer. Furthermore, adopting blockchain promotes the coordination of the manufacturer and the platform.
... File sharing increases awareness of the music of small artists, thereby resulting in increasing revenues from their live performances (Mortimer et al., 2012). ...
Purpose
Along with their immense benefit, online channels of communication and information-sharing also present a myriad set of challenges. The unauthorized downloading and sharing of copyrighted content such as music and movies is one such issue. This study aims to examine the factors related to the unauthorized downloading of content amongst young internet users in an emerging market.
Design/methodology/approach
An online structured questionnaire was used to collect primary data from 219 internet users between 17 and 24 years of age. The partial least squares structural equation modelling was used to analyse the primary data.
Findings
The study findings report that monetary savings and social influence are the main drivers underlying the propensity to engage in unauthorized downloading amongst young adults. Perceptions of harm caused to artists and producers appear to be a deterrent. Though the respondents perceive the quality of content downloaded from unauthorized sites to be less than desirable, and there is also a higher perceived threat from viruses, this does not appear to deter unauthorized downloading behaviour amongst this segment of consumers.
Research limitations/implications
Combating unauthorized downloading and other forms of questionable online behaviours is a challenge for multiple stakeholders. Consumption of unauthorized digital content is examined in the context of online consumers whose demographic profile is often associated with this category of questionable behaviour. The study adds to the extant understanding of the aetiology of what are often considered online unethical and illegal behaviours and makes both practical and theoretical contributions to the subject field.
Originality/value
The study examines an important aspect of rapidly evolving internet technologies. The internet provides a veil to individuals engaging in unethical online activities. Despite the existence of laws declaring these activities to be illegal, instances of copyright violations of music and movies abound. The insights regarding the drivers and deterrents of a form of online unauthorized activity are used to present a set of strategies aimed at addressing such behaviours.
... Ultimately, the situation can even generate a net advantage compared to a situation without counterfeiting (Liebowitz, 2004). For instance, in the music industry, Mortimer et al. (2012) found evidence suggesting that while filesharing reduced album sales, the practice simultaneously increased demand for live music concerts, with an effect that is most pronounced for smaller artists. Insights stemming from wine counterfeiting can also provide crucial marketing information. ...
Given that counterfeiting cannot be easily eliminated, we develop four approaches by which luxury wine producers can leverage the opportunities of being counterfeited. Counterfeit wines can increase brand exposure and awareness and serve as gateways for their genuine counterparts. Genuine producers can exploit the existence of counterfeit wines to develop innovative wine‐based experiences that cannot be counterfeited and boost innovation strategies.
... Still, retail ticket prices increased after record sales declined due to piracy ( Krueger, 2005 ). Mortimer et al. (2012) and Cho et al. (2017) study how piracy and the internet affected the concerts for small versus well-known performers. ...
The fast-paced growth of e-commerce is rapidly changing consumers’ shopping habits and shaping the future of the retail industry. While online retailing has allowed companies to overcome geographic barriers to selling and helped them achieve operational efficiencies, offline retailers have struggled to compete with online retailers, and many retailers have chosen to operate both online and offline. This paper presents a review of the literature on the interaction between e-commerce and offline retailing, highlighting empirical findings and generalizable insights, and discussing their managerial implications. Our review includes studies published in more than 50 different academic journals spanning various disciplines from the inception of the internet to present. We organize our paper around three main research questions. First, what is the relationship between online and offline retail channels including competition and complementarity between online and offline sellers as well as online and offline channels of an omnichannel retailer? Under this question we also try to understand the impact of e-commerce on market structure and what factors impact the intensity of competition /complementarity. Second, what is the impact of e-commerce on consumer behavior? We specifically investigate how e-commerce has impacted consumer search, its implications for price dispersion, and user generated content. Third, how has e-commerce impacted retailers’ key managerial decisions? The key research questions under this heading include: (i) What is the impact of big data on retailing? (ii) What is the impact of digitization on retailer outcomes? (iii) What is the impact of e-commerce on sales concentration? (iv) What is the impact of e-commerce and platforms on pricing? And (v) How should retailers manage product returns across online and offline channels? Under each section, we also develop detailed recommendations for future research which we hope will inspire continued interest in this domain.
... Many studies begin with the presumption of weak IP rights rather than directly testing the point. For example, a growing stream of research on digitally recorded music tests implications for both product demand (Waldfogel, 2012;Oberholzer et al., 2015;Givon et al., 1995;Reimers, 2016;Nagaraj, 2018) and the supply-side provision of products (e.g., Mortimer et al., 2012;Givon et al., 1995;Peitz and Waelbroeck, 2006;Waldfogel and Aguiar, 2018). 4 A handful of other studies more directly examine the effects of applying or removing property rights protections and find that they are to some extent effective. ...
It is yet unclear whether patents and copyright are effective at protecting digital innovations. In this paper, we investigate this question using novel product-level data on mobile apps, in which we relate the use of both patents and copyright to (i) revenue performance and (ii) IP licensing. We theorize that these relationships depend on differences in product-level characteristics and that apps differentiated by their design are more likely and effectively to be protected by patents; apps combining elements of differentiated content are more likely and effectively protected by copyright. Our results support these predictions that product characteristics shape the appropriate contingent use of patent and copyright protection in digital products. These patterns are especially relevant to industries where digital products combine elements of differentiated design and differentiated digital content.
... Consequently, many news organizations have closed, and those that remain have fewer reporters and produce less content than before (Abernathy, 2018). Revenue models for music and other media industries have been similarly disrupted (Mortimer et al., 2012) by the Internet and later various platforms. ...
This chapter discusses how big data sets from digital media environments are creating change-management challenges for media organizations. We discuss the data and analytics factors that have driven these changes and, in doing this, anticipate how these factors will affect the media industries in the future. Next, we propose a framework for how media organizations should manage such changes, including people, processes, data and technology, and incentives. We close by identifying emerging factors that will likely have substantial effects—either positive or negative—in the future.
... A tension exists in piracy research, as some studies have shown negative effects of illegal copies on legal demand (Hui and Png 2003;Bae and Choi 2006;Yoon 2007;Liebowitz 2008;Hong 2013;Waldfogel 2012;Belleflamme and Peitz 2014), with varying estimates on the sales displacement effect (Aguiar and Waldfogel 2018;Li, Liao, and Xie 2019;Yue 2019). Yet, other piracy research has found positive effects of piracy on legal demand (Fader 2000;Jain 2008;Mortimer, Nosko, and Sorensen 2012;Lu, Wang, and Bendle 2020). In many of these studies, a common belief is a trade-off in sampling versus cannibalization, with willingness to pay as a common explanation. ...
... I2O spillovers may also occur in practice. For example, for digital goods, such as music, movies, software, and books, Internet sales can stimulate offline sales, especially in the absence of piracy ( Mortimer, Nosko & Sorensen, 2012 ;Smith & Telang, 2010 ). In this case, Internet channels provide a broader assortment of content or products and more convenience in purchasing than offline channels. ...
With the increasing popularity of third-party platforms, some retailers have used them to sell their products in addition to their own online and offline channels, while others retailers have not. An important pair of questions thus arise: should a retailer that has its own online and offline channels sell through a third-party platform? If so, which selling format should it adopt? This study considers the interaction between offline channel and internet channels (including online channel and third-party platform channel) and establishes a model with a spillover effect that can act in two directions: from offline channel to internet channels (O2I) or from internet channels to offline channel (I2O). We explore three different supply chain structures/scenarios: a dual-channel structure (D); a triple-channel structure: reselling format (MR); and a triple-channel structure: agency selling format (MA). Using a game-theoretic model, we investigate whether the retailer should use a third-party platform and its selling format preference, and further explore the impact of the direction of the spillover effect. Our theoretical analysis shows that when the channel competition is moderate, the region in which the retailer uses the third-party platform first increases and then decreases as the spillover effect increases. Given a reasonable agency fee, when the channel competition is medium, the retailer is more likely to prefer MR as the O2I spillover effect increases, but to prefer MA as the I2O spillover effect increases. We also find that two Pareto zones exist, that is, the retailer and third-party platform prefer the same selling format in some cases, either MR or MA.
... On the other hand, although Tian et al. [18] recently addressed strategic mode choice involving the combined reselling and agency selling, they paid little attention on the competition between differentiated channels. The latest empirical evidence and experimental results, however, show that the sales in one channel would create the cross-channel effects and impacts on the sales in another channel [19,20]. Therefore, the third question remains: What are the implications of the changing business mode of e-tailers on bricks-and-mortar retailers? ...
Whether or not online retailers (“e-tailers”) should choose a reselling or agency selling business mode has been well studied by academics. In practice, many major e-tailers, including Amazon and JD.com, are moving toward a combined approach, but not toward the pure agency selling mode. We adopt a game theoretical model to examine the implications of this transition by considering a supplier that distributes its products through a bricks-and-mortar retailer and an e-tailer who has the flexibility of using reselling or combined reselling and agency selling. Conventional wisdom suggests that the agency selling would benefit the supply chain members due to the effect of eliminating double-marginalization. Our results, however, reveal that, comparing with the reselling mode, the additional agency selling is not always beneficial to the supplier nor always helpful to the bricks-and-mortar retailer. These findings not only complement the emerging literature regarding the strategic mode choice of e-tailers but also, from a practical perspective, urge caution in whether the supplier should participate in the e-tailer’s marketplace through agency selling.
... In economic departments, research focuses primarily on the internal economic impact of live music. Economists such as Krueger (2019) and Mortimer et al. (2012) contribute to the understanding of live music's value in relation to recorded music. From a business and marketing perspective, relevant contributions include studies on branding, brand equity, customer equity and hedonic consumption (e.g. ...
Purpose
This paper sets out to compare different methodologies for measuring the value(s) of live popular music and to explore the different motivations amongst a range of organisations engaged in that work.
Design/methodology/approach
The authors analyse how the values of live music are measured, who does it and why. Based on this analysis the authors present a model that visualises the myriad of organisations, methods, aims and objectives involved.
Findings
The authors identify three approaches to measuring the impact of live music (economic impact studies, mapping and censuses and social sciences and humanities) and three types of actors (industry, policy and academia). The analysis of these demonstrates that measuring live music is not a neutral activity, but itself constructs a vision on how live music ecologies function
Practical implications
For cultural organisations, demonstrating the outcomes of their work is important in acquiring various forms of support. The model presented in this paper helps them to select adequate methodologies and to reflect on the consequences of particular approaches to measuring live music activities.
Originality/value
While the number of studies measuring live music's impact is growing, theoretical and methodological reflection on these activities is missing. The authors compare the different methodologies by discussing strengths and weaknesses. This results in a model that identifies gaps in existing studies and explores new directions for future live music research. It enhances understanding of how different ways of measuring live music affect policymaking and conceptions of what live music is and should be.
... Further problems arise through aging of the artist. Music videos are typically produced in combination with new records which are released in a time-span of one to three years on average [197]. ...
This thesis combines audio-analysis with computer vision to approach Music Information Retrieval (MIR) tasks from a multi-modal perspective. This thesis focuses on the information provided by the visual layer of music videos and how it can be harnessed to augment and improve tasks of the MIR research domain. The main hypothesis of this work is based on the observation that certain expressive categories such as genre or theme can be recognized on the basis of the visual content alone, without the sound being heard. This leads to the hypothesis that there exists a visual language that is used to express mood or genre. In a further consequence it can be concluded that this visual information is music related and thus should be beneficial for the corresponding MIR tasks such as music genre classification or mood recognition. A series of comprehensive experiments and evaluations are conducted which are focused on the extraction of visual information and its application in different MIR tasks. A custom dataset is created, suitable to develop and test visual features which are able to represent music related information. Evaluations range from low-level visual features to high-level concepts retrieved by means of Deep Convolutional Neural Networks. Additionally, new visual features are introduced capturing rhythmic visual patterns. In all of these experiments the audio-based results serve as benchmark for the visual and audio-visual approaches. The experiments are conducted for three MIR tasks Artist Identification, Music Genre Classification and Cross-Genre Classification. Experiments show that an audio-visual approach harnessing high-level semantic information gained from visual concept detection, outperforms audio-only genre-classification accuracy by 16.43%.
... I2O spillovers may also occur in practice. For example, for digital goods, such as music, movies, software, and books, Internet sales can stimulate offline sales, especially in the absence of piracy (Mortimer et al., 2012;Smith & Telang, 2010). In this case, Internet channels provide a broader assortment of content or products and more convenience in purchasing than offline channels. ...
... As we mentioned in the introduction, the ODS service can increase both the offline channel demand and online channel demand with the help of the online channel's advertisement and introduction, and the offline channel's display and service, respectively. Theoretical research (Mortimer et al., 2012;Bell et al., 2018;Sit et al., 2018) has also indicated that ODS could generate demands and create benefits for both the online channel and offline channel. We assume that the increases in demand for online channel and offline channel due to the ODS business development are ns r and n s r , respectively. ...
The retail industry is accelerating the transition from multi-channel to omni-channel. A display showroom is a main mode of operation in omni-channel retailing. In this, consumers find products in an online channel, experience products and receive services in offline showrooms, and make a purchase by placing an order online or offline. In practice, the online channel (offline service) can be opened (invested in) by the manufacturer or the retailer. This paper explores the relevant issues by establishing and comparing four kinds of Stackelberg game models: (1) the manufacturer simultaneously opens an online channel and invests in the offline service (MM mode; (2) the manufacturer opens an online channel, but the retailer invests in the offline service (MR mode); (3) the retailer opens an online channel, but the manufacturer invests in the offline service (RM mode); and (4) the retailer simultaneously opens an online channel and invests in the offline service (RR mode). In these models, the online channel and offline channel cooperate through a display showroom. The results show that regardless of the kind of channel structure, a display showroom can generate benefits for the manufacturer, the retailer and the whole omni-channel supply chain. And from the perspectives of the manufacturer and the whole supply chain, if the consumer service perception degree is low, the price competition degree is high (low), and the service cooperation degree are high (low), and the MM (MR) mode is the optimal channel structure. Otherwise, if the consumer service perception degree is high, the RR mode is the most efficient channel structure for the manufacturer and the omni-channel supply chain. For the retailer, the RR mode is always the best channel structure. The improved revenue-sharing contract and two-part tariff contract can achieve full coordination of and improvement in the operational efficiency of the omni-channel supply chain and achieve Pareto improvement for the supply chain members.
... rents versus peers on Generation Y Internet ethical attitudes. Electronic Commerce: Research and Applications, 14(2), 95-103. Moran, G.,Muzellec L. & Nolan, E. (2014). Consumer Moments of Truth in the Digital Context:How "Search" and "E-Word of Mouth" Can Fuel Consumer Decision-Making. Journal of Advertising Research, 54 (2): 200-204. Mortimer, J.,Nosko, C. and A. Sorensen. (2012). Supply Responses to Digital Distribution: Recorded Music and Live Performances. Information Economics and Policy, Vol. 24(1), 3- 14. Mowen, J. C. & Minor, M. (2002). Perilaku konsumen (Jilid 1, Edisi Kelima). Jakarta: Erlangga. Peter, J. Paul dan Olson, Jerry C. (2014). Perilaku Konsumen & Strategi Pemasaran (Edisi 9).Jakarta: Salemba ...
This study aims to analyze the direct and indirect effect of Subjective Norms and Attitude toward Concert Ticket Buying Decision via The Intention to Download Illegal Music and The Intention to Buy Legal Music as Intervening Variables. The population of this study is the undergraduate management student at Faculty of Economics and Business, University of Sumatera Utara 2016/2017 with the total sample is 100 students. The method of analysis is PLS-SEM (Partial Least Squares-Structural Equation Modeling) method by using SmartPLS 3.0 software.The results of this study show that Subjective Norms (X1) directly and significantly influences the Concert Ticket Buying Decision (Y). Subjective Norms (X1) significantly influences The Intention to Download Illegal Music (Z1). However, Subjective Norms (X1) does not significantly influence The Intention to Buy Legal Music (Z2). Attitude (X2) directly and significantly influences the Concert Ticket Buying Decision (Y). Attitude (X2) significantly influences The Intention to Buy Legal Music (Z2). However, Attitude (X2) does not significantly influence The Intention to Download Illegal Music (Z1). The Intention to Download Illegal Music (Z1) does not significantly influence the Concert Ticket Buying Decision (Y). The Intention to Buy Legal Music (Z2) does not significantly influence the Concert Ticket Buying Decision (Y). Subjective Norms (X1) does not indirectly and significantly influences the Concert Ticket Buying Decision (Y) via The Intention to Download Illegal Music (Z1). Subjective Norms (X1) does not indirectly and significantly influences the Concert Ticket Buying Decision (Y) via The Intention to Buy Legal Music (Z2). Attitude (X2) does not indirectly and significantly influences the Concert Ticket Buying Decision (Y) via The Intention to Download Illegal Music (Z1). Attitude (X2) does not indirectly and significantly influences the Concert Ticket Buying Decision (Y) via The Intention to Buy Legal Music (Z2). Keywords: Subjective Norms, Attitude, Behavioral Intention, Buying Intention, Buying Decision.
... The promotional effects of piracy have also been noted in markets that are underdeveloped and in which access is therefore limited [76]. It is also possible that a certain level of music piracy can drive sales in other revenue-generating areas providing a net benefit to PROs [78]. ...
The access economy business model has been applied to a wide range of digital goods and services such as software, movies, music, and books. The digital platforms that manage transactions between buyers and sellers enable product rights owners to define product usage rights with a great deal of precision. In this paper, music product usage rights for digital consumption and platform attributes of music streaming systems are discussed and a model for digital music streaming system adoption and digital piracy is presented. The results of a quasi-experiment suggest that the perceived freedom to tryout, modify, and share digital music products contribute to both perceived usefulness and perceived enjoyment of a product format and the music streaming system. In turn, perceived usefulness and perceived enjoyment lead to the intention to adopt a music streaming system. The perceived usefulness of a music streaming system is associated with a reduction of pirating intention.
... Finally, music piracy decreases record companies' profits due to lower record sales, whereas it increases artists' revenue from music complements such as concerts (e.g. [16,40]). ...
Online platforms, such as App Store and Kindle, are facing a common dilemma: while the implementation of technology-based protection impedes piracy and hence boosts demand from legal users (positive effect), the resulting restriction meanwhile imposes some level of disutility on the same due to inconvenience (negative effect). This paper investigates a monopolistic platform’s optimal protection level and pricing strategy under an agency business model (content agency model or advertising agency model). We find that the platform’s protection strategy hinges on the relative magnitude of the two opposing effects of protection. When the negative effect dominates, the minimal protection is optimal. However, as the positive effect becomes more salient, the platform has an incentive to increase the protection level. We also find that although the demand of non-pure platform users always increases as the level of content substitutability rises under the minimal and maximal protection regions, it is not necessarily the case under the medium protection region. The study advances our understanding of the content protection against piracy from a platform’s perspective. Our findings also provide insights into business model decision when platform protection is endogenously determined.
... See e.g.Mortimer, Nosko, and Sorensen (2012), who assert a positive correlation of file-sharing rand the demand for concerts, for the bigger picture. ...
... Empirical research on the music industry has been mainly directed toward piracy and other issues of digitization (Hammond (2014); Mortimer et al. (2012); Peitz and Waelbroeck (2006); Rob and Waldfogel (2006)). Very few have studied timing, and even fewer have considered the role record labels serve in the industry. ...
Major consolidation has occurred in the recorded music industry over the past 20 years, which has led some industry stakeholders to question the power and influence of the major remaining firms. I test whether there is evidence that subsidiaries of the large parent firms in this industry act as a cohesive unit or if they focus on maximizing their own profit without taking into consideration the effect they have on sister firms (other firms owned by the same parent). I do so by analyzing how release date timing differs between labels that are owned by the same parent company and those that are not. Using data on release dates, song/artist characteristics, and label ownership for the top-10 Billboard Hot 100 hits from 1990 to 2013, I am able to compare the length of time between releases for songs released by co-owned labels and songs released by separately owned labels. I find that overall, there is not a systematic difference in the release of songs produced by the same major compared to songs produced by different majors. These results suggest that subsidiary labels may in fact be acting independently—not internalizing the effect they have on sister firms.
... In his analysis of the impact the Internet and music piracy had on the music industry, Krueger (2005) argued that music recordings and music concerts constitute complementary forms of labor for musicians, in that albums increase the demand for live concert performances, and live concert performances increase the demand for albums among top performers. The illegitimate online reproduction of digital music then forces musicians to make up lost revenue through its complementary nondigital product: live concert performances (Krueger 2005;Mortimer, Nosko, and Sorensen 2012). Despite the loss in revenue from albums, performers still produce albums to promote their live concert performances. ...
What if certain types of work allow workers to earn higher incomes when bundled together? Using qualitative interview data on the careers of sex workers in California, the author argues that workers can attempt to increase overall earnings by taking part in promotional labor: a specific type of labor in which workers strategically bundle complementary forms of work with differing status and income levels to increase overall income. Because of a sharp decline in adult film production beginning in 2007, adult film performers relied on escorting to make up for lower wages and fewer filming opportunities. However, these sex workers still performed in adult films, despite filming being more time intensive and less financially lucrative, to promote themselves as high-end escorts. The author concludes that promotional labor is a mechanism by which workers and firms in general mitigate labor uncertainty by using the cross-promotional benefits of different types of complementary work.
... Likewise, the elimination of illegal copies could reduce an artist's fan base, which would be detrimental. (Mortimer et al. 2012) analyse this influence on artists, paying special attention to live performances. They observed the changes in live performances since Napster. ...
This chapter examines the dominant discourses surrounding the digital recording industry. It first demonstrates the evolution of the recording industry in the context of technological advances, intellectual property (IP) and organisational practices. I then extend the view to the perspective of the entire network of the recording industry and discuss a broader range of settings for innovation and a wider array of players involved in the recording industry in pre-digital settings. This chapter finishes by outlining existing views on the digitalisation of music in three dimensions: the techno-centric dichotomy in understanding the digital recording industry, the discourse of P2P technology’s impact on the market and the technological trajectory of P2P technology that has deviated from the prediction.
Music entertains us, influences us, and shapes our lives. From the message to the medium to the physical experience of listening to a live performance, music has charms to soothe the savage breast. Rock and roll used to be a way for people to stick it to the Man. Is that still possible in today’s corporatized world? Technological development has played a key role in music production and consumption. From the Sony Walkman to its modern day equivalent, the smartphone, technology affects how musicians create their work and how listeners experience it. This book examines the popular music industry from an economics perspective. It will examine how music is produced and consumed and investigate the role of technology in the business of music.
Conventional wisdom has it that intellectual property is essential to draw talent and effort into creative endeavour of various kinds. Does intellectual property suitably fulfil this noble mission? Is it indispensable in that role? Over the course of history, a variety of techniques have been deployed with a view to creating such a stimulus: first-mover advantage, secret, favouritism by the powerful, employment contracts, pensions, state procurement contracts, state subsidies, sponsorships, lotteries, prizes, to name just a few. (The argument that follows draws on the chapter on intellectual property in Rousseau et al. (Business law and economics for civil law systems, Edward Elgar, Cheltenham, 2021), 66–150.) Recently, a new field of study has appeared: “IP without IP” (open content, open science, open source, creative commons), looking at a host of fields where creative effort appears to thrive in spite of the absence of IP.
The article provides an overview of empirical research over the past half-century aimed at answering the question of how well these forms of stimuli work, historically and currently. It suggests that intellectual property is indispensable, yet that one must wonder whether copyright in particular has been stretched beyond its most appropriate range and at times may cause a slowdown in creativity.
Demand disruptions are common during emergencies and are typically accompanied by capacity constraints. Using a model in which a firm sells products through an online platform channel and an offline direct channel, we study the effect of demand disruptions on the firm and the online platform in the presence of constrained capacity. Our analysis reveals that prices in both channels are all subject to markup due to constrained capacity in the absence of demand disruptions. When the demand disruption is sufficiently mild, the firm adopts the constant online allocation strategy with sufficient capacity and the constant allocation strategy with limited capacity. When demand fluctuates substantially, the firm chooses a flexible allocation strategy or allocation‐shifting strategy according to whether the capacity is sufficient or constrained. Different from prior studies, the boundary of the firm's optimal strategies depends on the capacity constraint. Furthermore, we find that when the capacity is low relative to some threshold, increasing capacity harms the firm's profits. Finally, we impart insights and provide guidance for the firm in determining optimal pricing and product allocation strategies when facing demand disruptions in other related emergency scenarios.
In this paper, we investigate how spillovers from online sales to offline sales and product innovation jointly affect suppliers’ optimal online channel structure strategies. By comparing equilibrium outcomes of the game between a supplier, an offline retailer and an online retailer in different scenarios, including the scenario without product innovation, the scenario with exogenous product innovation and the scenario with endogenous product innovation, we obtain some novel management implications. There exists a threshold curve such that when the supplier's marginal operating cost is below the threshold curve, the supplier is better off establishing a direct online channel, otherwise, the supplier should introduce an independent online channel. Nonetheless, the threshold curve is not a monotonic function of the spillover coefficient, but a function that decreases first and then increases with the the spillover coefficient. Exogenous product innovation does not change the supplier’s optimal online channel structure strategy qualitatively, it leads to some quantitative changes, shifting the threshold curve upward. However, endogenous product innovation changes the position and shape of the threshold curve significantly and gives the supplier the flexibility to establish the direct online channel. This paper reveals an underlying trade-off between online channel operational efficiency and channel coordination, providing suppliers managerial suggestions on online channel structure strategies.
This study discusses the importance of curation in the contemporary economy, particularly in cities. Curators facilitate choice among symbolically-differentiated products either by directly choosing products on behalf of clients or otherwise lowering choice costs. Demand for curation is accelerating in sectors where symbolic differentiation is a source of value, including cultural products, finance, and research. This is both because these sectors command a greater share of economic activity and because digital technologies have dramatically expanded the available supply of symbolic products. Here, the focus is on how professional curation is organized within symbolic/creative industries and across space. Curation is said to resemble a relay wherein the decisions/outputs of some curators are incorporated as inputs into curation decisions downstream. As product sets are passed through this system, the number of products under consideration is lowered along with the level of uncertainty surrounding each product’s value. Because curation systems require continuous information exchange, they should realize benefits from localization. Five types of agglomeration economies are identified: the superiority of face-to-face communication, the ability to form information cascades, coordination of ‘consideration sets’, the ability to determine what the market values, and provenance effects. Two empirical analyses support these propositions. A small study of the US labor force finds that curating occupational categories agglomerate at higher levels. A detailed analysis of major music festival programming between 2017 and 2019 shows that previously curated acts are more likely to be selected to festivals, that festival programmers are more likely to select acts from their local environment, and that acts from prominent music scenes are more likely to be selected to major festivals, controlling for quality. LA, New York, Nashville, and London are said to export 37% of music festival acts to major festivals, at least in part, because musicians in these places have better access to curation systems. These results as well as the theory of curation presented here suggest that the ability of ‘creative cities’ to unearth or determine product value may currently be understated.
In this paper, we study the pricing and carbon abatement decisions of a manufacturer who sells products to consumers with environmental awareness through an online platform and an offline channel. The platform operates with marketplace or reselling mode. Cross-channel spillover effect is taken into account to reflect the impact of online channel sales on offline channel sales. With marketplace mode, the manufacturer directly sells his products to consumers on the platform, paying a commission to the platform for each order. With reselling mode, the manufacturer wholesales products to the platform, who then retails them to consumers. We find that the increase of the cross-channel effect can positively affect the carbon abatement level, the production quantity and the profits of the manufacturer and the platform. Marketplace (reselling) mode provides the manufacturer with more profits than reselling (marketplace) mode and induces the manufacturer to adopt greener technology if the cross-channel spillover effect is high (low). Marketplace mode cannot coordinate the manufacturer and the platform, while reselling mode can if the cross-channel spillover effect is negative. We also extend the models to the case under omni-channel strategy and find that omni-channel strategy leads to higher carbon abatement level and brings more profit to the manufacturer under certain conditions. In addition, marketplace mode cannot coordinate the manufacturer and the platform, while reselling mode always can. The findings in this paper not only enrich the theoretical research in platform-based and low-carbon operations management, but also guide the management practice in these aspects.
The music industry has widely viewed digital rights management (DRM) as an effective strategy for reducing digital piracy. Digital rights management systems aim to prevent unauthorized copying and to reduce the overall rate of piracy. Therefore, the recent move toward offering DRM-free music by some major online music sellers appears paradoxical. In this article, the authors propose a model that conceptualizes and estimates the concept of hardcore piracy in an attempt to resolve this apparent paradox. Based on two large empirical studies and a validation exercise with a large sample of more 2000 college students, the model results indicate that the music industry can benefit from removing DRM because such a strategy has the potential to convert some pirates into paying consumers. In addition, a DRM-free environment enhances both consumer and producer welfare by increasing the demand for legitimate products as well as consumers’ willingness to pay for these products. The authors find that producers could benefit by lowering prices from currently observed levels. The article concludes with a discussion of the practical implications of the findings for managers within the music industry.
A frequently used explanations for the emergence of secondary markets for live entertainment and the ability of resellers to charge a markup over face‐value prices is that promoters do not price discriminate optimally. We test this hypothesis empirically, using instrumental variables techniques on a sample of 45 popular music concerts and find that secondary market markups are not caused by the level of price discrimination used by promoters on primary markets. The experience and success of the artist drive both primary market pricing and secondary market markups, which are consistent with theories of social influence and pricing of complementary products.
For industries ranging from software to pharmaceuticals and entertainment, there is an intense debate about the appropriate level of protection for intellectual property. The Internet provides a natural crucible to assess the implications of reduced protection because it drastically lowers the cost of copying information. In this paper, we analyze whether file sharing has reduced the legal sales of music. While this question is receiving considerable attention in academia, industry, and Congress, we are the first to study the phenomenon employing data on actual downloads of music files. We match an extensive sample of downloads to U. S. sales data for a large number of albums. To establish causality, we instrument for downloads using data on international school holidays. Downloads have an effect on sales that is statistically indistinguishable from zero. Our estimates are inconsistent
Using survey data on movie consumption by about 500 University of Pennsylvania undergraduate students, we ask whether unpaid consumption of movies displaces paid consumption. A variety of cross-sectional and longitudinal empirical approaches show large and statistically significant evidence of displacement. In the most appropriate empirical specification, we find that unpaid first consumption reduces paid consumption by about 1 unit. Unpaid second consumption has a smaller effect, about 0.20 units. Our analysis indicates that unpaid consumption, which makes up 5.2 per cent of movie viewing in our sample, reduced paid consumption in our sample by 3.5 per cent.
This paper investigates the impact of peer-to-peer networks that promote the unauthorized downloading of MP3 files exert on the recording industry. Although Napster was the most famous of these systems, its progeny have continued to allow millions of music listeners to download music (and other) files without remuneration to the copyright owners. Economic theory does not allow us to determine what the impact of such downloading will be. Using data on the historical sales of prerecorded music I examine in detail the recent decline in record sales and attempt to gauge the importance of various factors that have been put forward to explain this decline. My conclusion is that the evidence is most consistent with a claim that MP3 downloads decrease sales. Nevertheless, it is unclear whether the damage to the industry will be fatal.
This paper measures the eect of file sharing on equilibrium record sales. Previous research has suered from little direct information on who downloaded music and how much their music expenditures changed. This paper uses the introduction of Napster and exploits two household-level data sets. I begin with a dierence-in-dierences approach, treating the presence of Napster as a technological event that only Internet users experienced. To account for compositional changes in Internet users as well as the likely relationship between music expenditure and the propensity to adopt the Internet, I improve upon nonparametric matching methods. Because of confounding factors due to other new online activities, I additionally combine two datasets. Taken together, the results suggest that file sharing explains 20% of total sales decline, which is driven by households with children aged 6-17.
This paper attempts to explain why innovating firms often fail to obtain significant economic returns from an innovation, while customers, imitators and other industry participants benefit Business strategy — particularly as it relates to the firm's decision to integrate and collaborate — is shown to be an important factor. The paper demonstrates that when imitation is easy, markets don't work well, and the profits from innovation may accrue to the owners of certain complementary assets, rather than to the developers of the intellectual property. This speaks to the need, in certain cases, for the innovating firm to establish a prior position in these complementary assets. The paper also indicates that innovators with new products and processes which provide value to consumers may sometimes be so ill positioned in the market that they necessarily will fail. The analysis provides a theoretical foundation for the proposition that manufacturing often matters, particularly to innovating nations. Innovating firms without the requisite manufacturing and related capacities may die, even though they are the best at innovation. Implications for trade policy and domestic economic policy are examined.
Creators and owners of intellectual properties are alarmed by the growth of technologies that ease the tasks of copying these properties. This paper, however, shows that the unauthorized copying of intellectual properties need not be harmful and actually may be beneficial. The empirical impact of photocopying on publishers of journals is examined in an attempt to discover if publishers can indirectly appropriate revenues from users who are not original purchasers. The evidence indicates that publishers can indirectly appropriate revenues from users who do not directly purchase journals and that photocopying has not harmed journal publishers. 18 references, 1 table.
File sharing may substantially undermine the intellectual property rights of digital goods. This paper concentrates on the music industry. I estimate the effect of music downloads on the probability of purchasing music using a European individual-level cross section of 15,000 people from 2001. A simple comparison of means shows that people who regularly download music online are more likely to buy music. The positive relationship persists when controlling for observed characteristics. However, simultaneity between tastes for music and peer-to-peer usage makes it difficult to isolate the causal effect of music downloads on music purchases. To break that simultaneity, this paper uses measures of Internet sophistication and the speed of the Internet connection as instruments. The results suggest that peer-to-peer usage reduces the probability of buying music by 30 percent. On the basis of my estimates, back-of-the-envelope calculations indicate that--without downloads--sales in 2002 would have been around 7.8 percent higher.
As it becomes cheaper to copy and share digital content, vendors are turning to technical protections such as encryption. We argue that if protection is nevertheless imperfect, this transition will generally lower the prices of content relative to perfect legal enforcement. However, the effect on prices depends on whether the content providers use independent protection standards or a shared one, and if shared, on the governance of the system. Even if a shared system permits content providers to set their prices independently, the equilibrium prices will depend on how the vendors share the costs. We show that demand-based cost sharing generally leads to higher prices than revenue-based cost sharing. Users, vendors and the antitrust authorities will typically have different views on what capabilities the DRM system should have. We argue that, when a DRM system is implemented as an industry standard, there is a potential for "collusion through technology."
. Information goods such as books, journals, computer software, videos, etc. can often be copied, shared, or rented. I outline various circumstances under which such sharing may increase or decrease producer profits. If a rental market is present, more copies will be sold at a lower price; I derive conditions that illustrate when this is more or less profitable than a sales-only market. When content is viewed only a few times and transactions costs of rental are low, rental may be more attractive than sales to both producers and consumers. Finally, when users have heterogeneous tastes, a rental market provides a nice way to segment high-value and low value users. These effects tend to suggest that rental markets may often increase profits, contrary to widespread views to the contrary. Keywords. Rental, copying, sharing, intellectual property JEL Classification Numbers. D4, L86, L96 Address. Hal R. Varian, School of Information Management and Systems, 102 South Hall, University of Calif...
Other Cohort 2 (rank 51 to 100) -0.02 -0
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Cohort 2 (rank 51 to 100)
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