Showing 3 Publications

Have We Misunderstood Copyright’s Consequences?

Scholarship Abstract This paper uses an unusually rich 21st century data set to compare two sets of vintage bestsellers from the early 20th century that, by . . .

Abstract

This paper uses an unusually rich 21st century data set to compare two sets of vintage bestsellers from the early 20th century that, by a circuitous path of copyright law alterations, came to have different copyright treatments. The most striking result is that, on average, copyrighted vintage bestsellers sell almost four times as many copies as public domain vintage bestsellers and this result holds throughout the sales distribution. This result conflicts with the expectation that copyright would restrict sales by allowing the exercise of monopoly power, and instead points to factors such as post-creation investment by publishers as being much more important than previously recognized. These greater sales occur despite a price premium that we find for copyrighted works, which is on average of a size similar to royalty payments typically paid to authors, although it appears to be considerably higher for better selling editions. We also find, contrary to previous claims, that vintage copyrighted titles are slightly more likely to be sold in the market than are works in the public domain. These results imply that copyright is more likely to be socially beneficial than previously thought and substituting our superior sales data into a previously published model confirms this implication. Further, these results imply that retroactive copyright extensions are socially advantageous and that indefinitely renewable copyright is more likely to be an optimal policy.

Continue reading
Intellectual Property & Licensing

The Challenges of Using Ranks to Estimate Sales

Scholarship Abstract Researchers have frequently used publicly available data on product ranks to estimate nonpublic sales quantities, believing that there is a linear relationship between logged . . .

Abstract

Researchers have frequently used publicly available data on product ranks to estimate nonpublic sales quantities, believing that there is a linear relationship between logged rank and logged sales values due to the assumption that sales follow a power law. However, using data on book sales, which are commonly thought to follow a power law, we find that the (double logged) relationship between ranking and sales is not linear, but actually concave. We demonstrate that this concavity is likely to cause poor predictions of sales in many instances. We also explore the use of nonlinear specifications as an alternative method to predict sales from ranks and find a simple specification that ameliorates many of these poor sales estimates. We illustrate some of the problems of applying a linear technique to this nonlinear relationship by examining the claim that the greater product variety made available to shoppers on the Internet has a large positive impact on social welfare, and also a claim about sales levels in top 20 and top 50 “charts.”

Continue reading
Innovation & the New Economy

The Oberholzer-Gee/Strumpf File-Sharing Instrument Fails the Laugh Test

Scholarship Abstract I examine the key instrument (German kids on vacation) used by Professors Oberholzer-Gee and Strumpf in their analysis of the impact of file-sharing on . . .

Abstract

I examine the key instrument (German kids on vacation) used by Professors Oberholzer-Gee and Strumpf in their analysis of the impact of file-sharing on record sales, published as the lead article in the Feb 2007 JPE. Their measured relationship between the instrument (German students on vacation) and the variable that it is instrumenting for, American downloading, is seen to have outlandish implications in the often overlooked first stage regressions. The coefficient implies that if German secondary students all go to school, American file-sharing would drop to zero. A nonsensical result of this sort indicates an important error somewhere in their data or analysis. The instrument is also shown to be related to American record sales, contrary to the claims of Professors Oberholzer-Gee and Strumpf, and contrary to the requirements of their analysis. Further, their measurement of downloading varies wildly from week to week and is inconsistent with downloading data from Big Champagne. In addition, their data on file-sharing, which Professors Oberholzer-Gee and Strumpf state is representative of worldwide file-sharing, is actually biased according to some of their own statistics which they failed to examine, considerably overstating the share of German files. Finally, I demonstrate that German students on vacation cannot have a measurable impact on American downloading (and thus American record sales) negating its potential usefulness and implying that the approach taken by Professors Oberholzer-Gee and Strumpf could never have provided useful information about the impact of file-sharing on record sales.

Continue reading
Intellectual Property & Licensing