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Understanding Media Markets in the Digital Age: Economics and Methodology

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  • Brett Danaher
  • Samita Dhanasobhon
  • Michael D. Smith
  • Rahul Telang

Abstract

Digitization raises a variety of important academic and managerial questions around firm strategies and public policies for the content industries, with many of these questions influenced by the erosion of copyright caused by Internet file-sharing. At the same time, digitization has created many new opportunities to empirically analyze these questions by leveraging new data sources and abundant natural experiments in media markets. In this chapter we describe the open "big picture" questions related to digitization and the copyright industries, and discuss methodological approaches to leverage the new data and natural experiments in digital markets to address these questions. We close our chapter with a specific proof of concept research study that analyzes an important academic and managerial question -- the impact of legitimate streaming services on the demand for piracy. We use ABC's decision to add its content to Hulu.com as a natural experiment and show that it resulted in an economically and statistically significant drop in piracy of that content.

Suggested Citation

  • Brett Danaher & Samita Dhanasobhon & Michael D. Smith & Rahul Telang, 2013. "Understanding Media Markets in the Digital Age: Economics and Methodology," NBER Working Papers 19634, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:19634
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    References listed on IDEAS

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    1. Mortimer, Julie Holland & Nosko, Chris & Sorensen, Alan, 2012. "Supply responses to digital distribution: Recorded music and live performances," Information Economics and Policy, Elsevier, vol. 24(1), pages 3-14.
    2. Liebowitz, Stan J, 2006. "File Sharing: Creative Destruction or Just Plain Destruction?," Journal of Law and Economics, University of Chicago Press, vol. 49(1), pages 1-28, April.
    3. Felix Oberholzer-Gee & Koleman Strumpf, 2010. "File Sharing and Copyright," Innovation Policy and the Economy, University of Chicago Press, vol. 10(1), pages 19-55.
    4. Josh Lerner & Scott Stern, 2010. "Innovation Policy and the Economy, Volume 10," NBER Books, National Bureau of Economic Research, Inc, number lern09-1.
    5. Brett Danaher & Michael D. Smith & Rahul Telang, 2014. "Piracy and Copyright Enforcement Mechanisms," Innovation Policy and the Economy, University of Chicago Press, vol. 14(1), pages 25-61.
    6. Joel Waldfogel, 2012. "Copyright Protection, Technological Change, and the Quality of New Products: Evidence from Recorded Music since Napster," Journal of Law and Economics, University of Chicago Press, vol. 55(4), pages 715-740.
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    8. Danaher, Brett & Smith, Michael D., 2014. "Gone in 60 Seconds: The Impact of the Megaupload Shutdown on Movie Sales," International Journal of Industrial Organization, Elsevier, vol. 33(C), pages 1-8.
    9. Felix Oberholzer-Gee & Koleman Strumpf, 2010. "File Sharing and Copyright," NBER Chapters, in: Innovation Policy and the Economy, Volume 10, pages 19-55, National Bureau of Economic Research, Inc.
    10. Brett Danaher & Samita Dhanasobhon & Michael D. Smith & Rahul Telang, 2010. "Converting Pirates Without Cannibalizing Purchasers: The Impact of Digital Distribution on Physical Sales and Internet Piracy," Marketing Science, INFORMS, vol. 29(6), pages 1138-1151, 11-12.
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    Cited by:

    1. Cuntz, Alexander & Bergquist, Kyle, 2022. "Exclusive content and platform competition in Latin America," Information Economics and Policy, Elsevier, vol. 60(C).
    2. Hailiang Chen & Yu Jeffrey Hu & Michael D. Smith, 2019. "The Impact of E-book Distribution on Print Sales: Analysis of a Natural Experiment," Management Science, INFORMS, vol. 65(1), pages 19-31, January.
    3. Frick, Sarah J. & Fletcher, Deborah & Smith, Austin C., 2023. "Pirate and chill: The effect of netflix on illegal streaming," Journal of Economic Behavior & Organization, Elsevier, vol. 209(C), pages 334-347.

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    More about this item

    JEL classification:

    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • L38 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Policy
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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