Like many new products, newly released creative goods such as books, music records and movies are sometimes ‘surprise’ hits but often flops. Experimental and empirical research suggests that it is hard to predict the demand for a new creative good, and therefore its success, even for industry experts. Rules of thumb on the quantitative properties of demand uncertainty exist for various creative industries – including a rule by Denis Diderot (1763) according to which one out of ten published books is a commercial success. Yet, representative evidence on any industry’s new-product success rate is scarce. This paper studies new-product success in a random sample of novels. Its empirical strategy to identify success – a simple characterization of author-publisher bargaining combined with a parsimonious model of new-product diffusion – is based on the common observation that word-of-mouth is a crucial success factor in creative industries. Parametric and semi-parametric estimation results corroborate Diderot’s rule: between 10 and 15% of novels enjoy significantly positive effects of word-of-mouth.
|Date of creation:||2008|
|Contact details of provider:|| Postal: Reichpietschufer 50, 10785 Berlin, Germany|
Phone: ++49 - 30 - 25491 - 0
Fax: ++49 - 30 - 25491 - 684
Web page: http://www.wzb.eu/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Dellarocas, Chrysanthos, 2003. "The Digitization of Word-of-mouth: Promise and Challenges of Online Feedback Mechanisms," Working papers 4296-03, Massachusetts Institute of Technology (MIT), Sloan School of Management.
- Dina Mayzlin & Judith A. Chevalier, 2003.
"The Effect of Word of Mouth on Sales: Online Book Reviews,"
Yale School of Management Working Papers
ysm413, Yale School of Management.
- Judith A. Chevalier & Dina Mayzlin, 2003. "The Effect of Word of Mouth on Sales: Online Book Reviews," NBER Working Papers 10148, National Bureau of Economic Research, Inc.
- Christophe Van den Bulte & Yogesh V. Joshi, 2007. "New Product Diffusion with Influentials and Imitators," Marketing Science, INFORMS, vol. 26(3), pages 400-421, 05-06.
- E. Gaffeo & A. E. Scorcu & L. Vici, 2008.
"Demand Distribution Dynamics in Creative Industries: the Market for Books in Italy,"
630, Dipartimento Scienze Economiche, Universita' di Bologna.
- Gaffeo, Edoardo & Scorcu, Antonello E. & Vici, Laura, 2008. "Demand distribution dynamics in creative industries: The market for books in Italy," Information Economics and Policy, Elsevier, vol. 20(3), pages 257-268, September.
- Edoardo Gaffeo & Antonello E. Scorcu & Laura Vici, 2008. "Demand Distribution Dynamics in Creative Industries: the Market for Books in Italy," Working Paper Series 09_08, The Rimini Centre for Economic Analysis.
- Richard Jensen, 1988. "Information Cost and Innovation Adoption Policies," Management Science, INFORMS, vol. 34(2), pages 230-239, February.
- Prince, Jeffrey T. & Simon, Daniel H., 2009. "Has the Internet accelerated the diffusion of new products?," Research Policy, Elsevier, vol. 38(8), pages 1269-1277, October.
- Clerides, Sofronis K., 2002. "Book value: intertemporal pricing and quality discrimination in the US market for books," International Journal of Industrial Organization, Elsevier, vol. 20(10), pages 1385-1408, December.
- Giles, David E., 2006.
"Superstardom in the US popular music industry revisited,"
Elsevier, vol. 92(1), pages 68-74, July.
- David E. Giles, 2005. "Superstardom in the U.S. Popular Music Industry Revisited," Econometrics Working Papers 0511, Department of Economics, University of Victoria.
- Jonathan Beck, 2007.
"The sales effect of word of mouth: a model for creative goods and estimates for novels,"
Journal of Cultural Economics,
Springer;The Association for Cultural Economics International, vol. 31(1), pages 5-23, March.
- Jonathan Beck, 2006. "The Sales Effect of Word of Mouth: A Model for Creative Goods and Estimates for Novels," CIG Working Papers SP II 2006-16, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
- M. C. Jones, 2006. "Book Review," Journal of Applied Statistics, Taylor & Francis Journals, vol. 33(10), pages 1149-1151.
- repec:trn:utwpde:0804 is not listed on IDEAS
- Deneckere, Raymond & Marvel, Howard P & Peck, James, 1997.
"Demand Uncertainty and Price Maintenance: Markdowns as Destructive Competition,"
American Economic Review,
American Economic Association, vol. 87(4), pages 619-641, September.
- Howard P. Marvel & Raymond Deneckere & James Peck, 1995. "Demand Uncertainty and Price Maintainance: Markdowns as Destructive Competition," Working Papers 018, Ohio State University, Department of Economics.
- Deneckere, R. & Marvel, H.P. & Peck, J., 1995. "Demand Uncertainty and Price Maintenace : Markdowns as Destructive Competition," Working papers 9507, Wisconsin Madison - Social Systems.
- Hall, Bronwyn H. & Khan, Beethika, 2003.
"Adoption of New Technology,"
Department of Economics, Working Paper Series
qt3wg4p528, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
- Rosen, Sherwin, 1981. "The Economics of Superstars," American Economic Review, American Economic Association, vol. 71(5), pages 845-858, December.
- De Vany, Arthur S. & Walls, W. David, 2004. "Motion picture profit, the stable Paretian hypothesis, and the curse of the superstar," Journal of Economic Dynamics and Control, Elsevier, vol. 28(6), pages 1035-1057, March.
- repec:rim:rimwps:09-08 is not listed on IDEAS
- Ruppert,David & Wand,M. P. & Carroll,R. J., 2003. "Semiparametric Regression," Cambridge Books, Cambridge University Press, number 9780521780506, December.
- Jacob Goldenberg & Donald R. Lehmann & David Mazursky, 2001. "The Idea Itself and the Circumstances of Its Emergence as Predictors of New Product Success," Management Science, INFORMS, vol. 47(1), pages 69-84, January.
- Chrysanthos Dellarocas, 2003. "The Digitization of Word of Mouth: Promise and Challenges of Online Feedback Mechanisms," Management Science, INFORMS, vol. 49(10), pages 1407-1424, October.
- Boswijk, H. Peter & Franses, Philip Hans, 2005. "On the Econometrics of the Bass Diffusion Model," Journal of Business & Economic Statistics, American Statistical Association, vol. 23, pages 255-268, July.
- Ruppert,David & Wand,M. P. & Carroll,R. J., 2003. "Semiparametric Regression," Cambridge Books, Cambridge University Press, number 9780521785167, December.
- R. Boadway, 2004. "Book Reviews," Journal of Economics, Springer, vol. 83(1), pages 95-98, 09.
- Dana, James D, Jr & Spier, Kathryn E, 2001. "Revenue Sharing and Vertical Control in the Video Rental Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 49(3), pages 223-245, September.
- Sofronis Clerides & George Kassinis, 2009. "Modeling the diffusion of strategies: an application to exporting," Industrial and Corporate Change, Oxford University Press, vol. 18(3), pages 415-434, June.
- Charles C. Moul, 2007. "Measuring Word of Mouth's Impact on Theatrical Movie Admissions," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 16(4), pages 859-892, December.
- Gérard P. Cachon & Martin A. Lariviere, 2005. "Supply Chain Coordination with Revenue-Sharing Contracts: Strengths and Limitations," Management Science, INFORMS, vol. 51(1), pages 30-44, January.
- Benny Moldovanu & Manfred Tietzel, 1998. "Goethe's Second-Price Auction," Journal of Political Economy, University of Chicago Press, vol. 106(4), pages 854-859, August.
- Bulow, Jeremy & Klemperer, Paul, 1996. "Auctions versus Negotiations," American Economic Review, American Economic Association, vol. 86(1), pages 180-194, March.
- Jonathan Beck, 2004. "Fixed, Focal, Fair? Book Prices Under Optional Resale Price Maintenance," CIG Working Papers SP II 2004-15, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
- Ken Hendricks & Alan Sorensen, 2009. "Information and the Skewness of Music Sales," Journal of Political Economy, University of Chicago Press, vol. 117(2), pages 324-369, 04.
- C. E. Bannier, 2004. "Book Reviews," Journal of Economics, Springer, vol. 83(1), pages 98-102, 09.
- Richard E. Caves, 2003. "Contracts Between Art and Commerce," Journal of Economic Perspectives, American Economic Association, vol. 17(2), pages 73-83, Spring.
- repec:cup:cbooks:9780521848053 is not listed on IDEAS
- Alan T. Sorensen, 2007. "BESTSELLER LISTS AND PRODUCT VARIETY -super-," Journal of Industrial Economics, Wiley Blackwell, vol. 55(4), pages 715-738, December.
When requesting a correction, please mention this item's handle: RePEc:zbw:wzbcin:spii200813. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - German National Library of Economics)
If references are entirely missing, you can add them using this form.