Contact Information:

H. John Heinz III School of Public Policy and Management
and Tepper School of Business
Carnegie Mellon University
4800 Forbes Avenue, HBH 3028
Pittsburgh PA, 15217
Email:
Voice: 412-268-5978
Fax: 412-268-5338
Office: Hamburg Hall 3028
Assistant: Gretchen Hunter (Hamburg Hall 3007,
412-268-6076)

New:
  • June-13: Brett Danaher, Rahul Telang, and I have a new paper that reviews the literature on the impact of piracy on sales and discusses policy and industry approaches that could be taken to address the negative impacts of piracy. This paper will be included in the NBER’s upcoming “Innovation Policy and The Economy” book edited by Josh Lerner and Scott Stern.

  • May-13: My papers on the Megaupload shutdown and on the impact of likes on sales of VOD movies will both be presented at the 2013 NBER Summer Institute, Economics of IT and Digitization Workshop in July.

  • May-13: Brett Danaher will present our Megaupload shutdown paper at the Searle Center’s 3rd Annual Research Roundtable on the Law and Economics of Digital Markets at Northwestern University on July 30.

  • May-13: Jeffrey Hu and I revised our paper analyzing how ebook distribution impacts print book sales. Our paper shows that across all ebooks, delaying the release of ebooks relative to print release dates results in a very small (and statistically insignificant) increase in print sales, but a large decrease in ebook sales, overall sales, and overall profit. However, we also show that consumers are more likely to switch from digital to physical channels when books with high brand awareness in unavailable digitally, and they are less likely to shift when books with strong digital characteristics (e.g., heavy print books or books with many pages) are unavailable digitally.

  • May-13: My paper with Chris Kemerer and Charles Liu appeared in the May 2013 issue of the Communications of the ACM. The paper summarizes our findings on how digital converters reduce network effects in standards markets, allowing for “winners-take-some” outcomes in what would otherwise be “winner-take-all” markets.

  • April-13: I presented our anti-piracy research results at an NBER event at the National Press Club.

  • April-13: Rahul Telang and I presented our anti-piracy research to President Obama’s Intellectual Property Enforcement Coordinator and her staff.

  • April-13: My paper with Miguel Godinho de Matos, Pedro Ferreira, and Rahul Telang titled “The Impact of Likes on the Sales of Movies in Video-on-Demand: a Randomized Experiment” was accepted at the Ninth Symposium on Statistical Challenges in Electronic Commerce Research (SCECR) in Lisbon, Portugal.

  • April-13: Our digital piracy research with Brett Danaher and Rahul Telang was covered on page A2 of the Wall Street Journal, and in a follow-up WSJ blog post.

  • March-13: I presented our Megaupload Research at a research seminar at The University of Pennsylvania’s Wharton School.

  • March-13: I presented a talk entitled “Competing With Free: How Digitization, Piracy, and Big Data Are Disrupting the Movie Industry” at a Computer Science Department Colloquium, at Calvin College.

  • March-13: Pedro Ferreira presented the results of our paper with Miguel Godinho de Matos and Rahul Telang titled “The Impact of Popularity on Sales of Movies in Video-on-Demand: a Randomized Experiment” at The National Bureau of Economic Research Economics of Digitization Workshop in Stanford, California. This paper analyzes how “likes” affect movie sales by conducting an experiment with a major cable company’s Video-On-Demand service to manipulate the number of likes shown to consumers. We find that search costs, rank and number of likes are significant determinants of sales. For search costs, our experiments show that movies sell 3 times more on average when they are shown on the first screen of the VOD system than when the same movie is shown in lower screens.

  • March-13: Ben Fritz at The Wall Street Journal wrote an article about our research into the shutdown of Megaupload. Our original paper is here, and Brett and I put together a follow-up blog post that talks more in detail about what we find and why we think the results make sense from the perspective of competition and consumer behavior. The paper was the most downloaded paper on ssrn.com for the week of March 22, and was covered on SSRN’s blog (http://ssrnblog.com).

  • February-13: My paper with Brett Danaher on the impact of Megaupload on digital movie sales was accepted at the 11th Annual International Industrial Organization Conference. The paper uses digital sales data from two major studios and analyzes whether countries with higher usage of Megaupload before it was shutdown had a larger increase in digital movie sales after it was shutdown than other countries did. We find that this was the case: “for each additional 1% pre-shutdown Megaupload penetration, the post-shutdown sales unit change was 2.5% to 3.8% higher,” and that in the aggregate shutting Megaupload caused digital movie sales to be 6-10% higher than they otherwise would have been.

  • February-13: My paper with Brett Danaher, Rahul Telang, and Siwen Chen on the impact of France’s HADOPI “3 strikes” anti-piracy law was accepted for publication in the Journal of Industrial Economics. The research finds that HADOPI caused a 22.5% increase in song sales and a 25% increase in album sales relative to sales in a control group of countries. We also find that the impact of HADOPI occurred primarily during the time period when the law was being discussed in the French press (and searched for by French citizens on the Internet), a period before the law was enacted and well before any notices were sent to individuals caught violating the law. Finally, we show that our results are robust to controlling for penetration of iOS devices.

  • February-13: Liye Ma, Alan Montgomery, Param Vir Singh, and I have updated our paper analyzing the impact of piracy on box office revenue. The paper adapts the well-established MOVIEMOD model to estimate the impact of piracy on sales, using data from VCDquality.com that documents the first date pirated copies of movies are available online. We find that movie piracy reduces box office sales by 24% relative to a hypothetical world where no piracy occurs. We also find that pre-release piracy is particularly harmful, decreasing box office revenue by 8% relative to a hypothetical world where all movie piracy occurred on the first day of release.

  • January-13: I gave a talk titled “Competing with Free: How Piracy Impacts Sales and Strategies to Fight It” at Digital Book World 2013. Bill Rosenblatt blogged about the talk, and a lively discussion ensued.

  • January-13: My paper titled “The Impact of Popularity on Sales of Movies in Video-on-Demand: A Randomized Experiment” with Miguel Godinho de Matos, Pedro Ferreira, and Rahul Telang was accepted at the NBER’s Winter Workshop on the Economics of Digitization. The paper implements a real-world experiment to change the position and number of “likes” for movies on a major cable provider’s Video On Demand system, allowing us to break the endogeneity between popularity and promotion of movies. We find that search costs, rank, and the number of likes all strongly influence sales.

  • December-12: I gave a talk “The Economics of Copyright Enforcement in a Digital Age” at the 2012 Variety Content Protection Summit.

  • December-12: My paper with Alejandro Zentner and Cuneyd Kaya was accepted for publication at Management Science. The paper analyzes how consumer purchasing patterns change when they move from physical stores (with limited stocking capacity) to online channels. We obtained data from a large video rental chain and use the closing of a consumer’s local video store as an exogenous shock to the cost of renting through the physical channel. We find that when consumers move from physical to online channels they are significantly more likely to rent “niche” titles relative to popular titles.

  • November-12: Brett Danaher presented our HADOPI “3 strikes” paper at the 2012 Federal Trade Commissions Microeconomics Conference.

  • November-12: Rahul Telang and I will co-direct the Initiative for Digital Entertainment Analytics (IDEA), a new research center at CMU. The press release from CMU is available here.

  • September-12: My paper with Charles Liu, Chris Kemerer, and Sandy Slaughter appeared in this month’s MIS Quarterly. The paper empirically shows that digital converters reduce the strength of network effects in markets for flash memory.

  • September-12: Rahul Telang, Yi Zhang, and I have co-authored a paper analyzing the potential consumer surplus gain that could be realized from making the world’s out-of-print books available in a digital format. Our findings were picked up in an article on Dow Jones MarketWatch.

  • September-12: I put together a blog post at Digitopoly titled “Does Piracy Harm Sales?” It summarizes the findings of a recent review of the academic literature on piracy that Rahul Telang and I authored. Our conclusion, based on the findings of vast majority of papers in the academic literature, is that piracy harms sales.

  • September-12: Rahul Telang and I have a short paper in this month’s Harvard Business Review discussing our findings on media sales and piracy.

  • September-12: I participated in the National Association of Recording Merchandisers’ Entertainment & Technology Law Conference Series as a panelist on “Comparing International Anti-Piracy Strategies.” My presentation was covered in an article on paidcontent.org, which generated some lively discussion.

  • August-12: My first blog post on Digitopoly, titled “Anti-Piracy Regulation and Competing with Free” takes on Nick Bilton’s New York Times editorial “Internet Pirates Will Always Win.” I argue that the academic literature suggests that anti-piracy regulation can increase media sales in legitimate channels, and argue “competing with free” piracy is just a special case of price competition where media companies can differentiate their own products (by using convenient, reliable, reasonably priced digital channels) and can differentiate the competing pirated products (through a variety of strategies, which might include anti-piracy regulation).

  • August-12: I participated in the Technology Policy Institute’s Aspen Forum in a panel called “Copyright and Piracy after SOPA/PIPA: Finding Common Ground.”

  • July-12: Rahul Telang and I have been awarded a Google Faculty Research Award for our work into optimizing release window strategies for digital products.