Progress 10/01/07 to 09/30/08
Outputs
OUTPUTS: I presented a paper at the annual meetings of the Academy of Management and of the Strategic Management Society. The paper is entitled, "Internal and External Influences on Firms' Adoption Decisions: The Moderating Effect of Experience. I submitted this paper (ooauthored by Marvin Lieberman) to Organization Science. PARTICIPANTS: Marvin Lieberman, a professor of Business Policy and Strategy at UCLA Anderson School of Management, is a coauthor on the paper. TARGET AUDIENCES: The target audience is researchers in the area of strategic management and organizational learning. PROJECT MODIFICATIONS: Nothing significant to report during this reporting period.
Impacts
We find that magazines with access to internal sources of information, from other magazines thave already adopted websites and are owned by the same publisher, are less influenced by rivals adopting websites.
Publications
- No publications reported this period
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Progress 10/01/06 to 09/30/07
Outputs
OUTPUTS: I have presented the results of this research in seminars on campus, as well as at the annual meetings of the Academy of Management and the Strategic Management Society. In addition I have posted research papers from this project on SSRN (Social Science Research Network), a digital collection of working papers.
PARTICIPANTS: Vrinda Kadiyali, Professor, Johnson Graduate School of Management, Cornell University. Marvin Lieberman, Professor, Anderson Graduate School of Management, University of California, Los Angeles.
PROJECT MODIFICATIONS: We have begun to consider the following question: In a multi-title publisher, how does one magazine's decision to adopt a website change the influence that rival adopters exert on the subsequent adoption decisions of the other magazines owned by the same publisher? We posit that in multi-unit firms, the initial adoption provides information which weakens the influence of rival adopters on the subsequent adoption decisions of the remaining business units. Therefore, in multi-title publishers, when one magazine establishes a website, this reduces the influence that rival adopters of websites exert on the adoption decisions of the other magazines owned by the same publisher.
Impacts
We use a searchable archive of websites to measure each magazine's free digital content in each year. The results indicate that offering digital content reduces the demand for the print magazine. On average, a magazine's print circulation declines about 3-4 percent when it offers a website. A unique aspect of our data is that we can measure the extent of overlap between digital and print content, enabling us to assess whether and how much this overlap affects cannibalization. While offering digital content that has limited overlap with the current print magazine reduces print sales by 2-4 percent, offering digital access to the entire contents of the current print magazine reduces print magazines sales by about nine percent.
Publications
- Simon, D.H. and Kadiyali, V. 2008. The Effect of a Magazine's Free Digital Content on its Print Circulation: Cannibalization or Complementarity? Information Econ. and Policy.
- Simon, D.H. 2005. Competition, Learning, or Legitimacy: Understanding the Adoption of Websites by Consumer Magazines. Academy of Management Annual Meetings Proceedings of Best Papers.
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Progress 01/01/06 to 12/31/06
Outputs
Over the past 12 months, I did additional data analysis to assess the relationship between a magazine's digital content and its print circulation. In particular I have worked on trying to separate the causal effect that offering free digital content exerts on a magazine's print circulation from the reverse effect in which changes in the demand for a print magazine may influence it's decision of whether and how much digital content to offer. To do so, I performed instrumental variable regressions, which are intended to control for the fact that changes in circulation may also influence magazines' decisions about whether and how much digital content to offer. This analysis provided further support that offering free digital content reduces a magazine's print circulation. I have now submitted a paper with this additional analysis to a special issue of Information Economics and Policy, which focuses on the economics of the media. In addition, I have written another paper
assessing the influence of rival magazines' website adoptions on a magazine's own decision of whether and when to adopt a website. While empirical research provides strong evidence that rival adoption increases a firm's propensity to adopt a new technology, the causal mechanism is often unclear. Research on the diffusion of innovations offers three main explanations for how rival adopters positively influence adoption by the remaining firms. The competitive threat hypothesis says that firms imitate rival adopters to mitigate the threat posed by rival adoption. The learning hypothesis says that firms imitate rival adopters because they provide information that adoption is likely to be beneficial. Institutional theories posit that firms imitate rival adopters to maintain legitimacy with stakeholders. Although the three explanations are not mutually exclusive, we identify conditions under which they generate competing predictions. To do so, we note that firms with sibling adopters -
other firms, owned by the same parent company, that have already adopted - have access to information from siblings and potentially lower costs of adoption because they may not have to incur all of the setup and operating costs. By comparing the adoption decisions of firms with sibling adopters versus firms without, we discriminate among the different theories. If the competitive threat or legitimacy explanations are correct, firms with sibling adopters should exploit their information and cost sharing advantages to respond more quickly when rivals adopt. On the other hand, under the learning hypothesis these firms should be less inclined to imitate rivals because they gain less new information from rival adoption. By comparing the effect of rival adoption on the adoption decisions of firms with and without sibling adopters, we test the learning explanation against the competitive threat and legitimacy explanations. We do so in the context of consumer magazines' decisions to establish
a website during the rise of the World Wide Web. This paper is under review at Organization Science.
Impacts
On average, offering free digital content reduces a magazine's print sales. In particular, allowing readers free digital access to the entire contents of the print magazine reduces print sales by about ten percent. The results provide no indication that magazines can boost their sales by offering free digital content. However, the results also emphasize that, for most consumers, digital content is not a good substitute for print media. Ninety percent of readers continue to buy the print magazine when the identical content is available on line, for free.
Publications
- No publications reported this period
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Progress 01/01/05 to 12/31/05
Outputs
Over the past 12 months, I did additional data analysis to assess the relationship between a magazine's digital content and its print circulation. In particular I have worked on trying to separate the causal effect that offering free digital content exerts on a magazine's print circulation from the reverse effect in which changes in the demand for a print magazine may influence it's decision of whether and how much digital content to offer. I used an internet archive to examine each magazine's website in each year that it existed, from 1996 through 2001. I coded each website on a 1-5 scale reflecting how much content from the current print issue was available for free on the website. I measure the amount of content from the current print magazine as a measure of the substitutability of the digital content for the print content. I analyzed these data by regressing magazine circulation on two alternative measures of the magazine's electronic content. First I considered
a simple indicator variable for the presence of a website. This allows me to evaluate how having a Website affects a magazine's print circulation. Second, I considered a variable that takes values from 0-5, corresponding to the scale of digital content described above. A magazine is coded as zero if it does not offer a website. I find that digital content cannibalizes print sales. On average, having a website reduces a magazine's circulation by about three percent. However, the effect varies with the overlap between the digital and print content. I find strong evidence that allowing readers to read the entire contents of the current issue on line has a negative effect on a magazine's print sales, reducing circulation by 9-11 percent. This finding is robust to a variety of econometric specifications and cannot be explained by contemporaneous price cuts. I also find evidence that offering digital content that overlaps less with the current print issue (original and archived content, a
table of contents and article teasers, or access to selected full-length articles from the current issue) cannibalizes print sales. Results indicate that each of these types of content reduces print circulation by 2-3 percent. While these results are less robust, the results fail to reveal any complementarity between digital and print content. It appears that magazines do not boost their circulation by offering digital content. Surprisingly, though, I find no evidence that digital content reduces print advertising sales. This suggests that advertisers value the opportunity to reach readers through coordinated multimedia advertising packages.
Impacts
On average, offering free digital content reduces a magazine's print sales. In particular, allowing readers free digital access to the entire contents of the print magazine reduces print sales by about ten percent. The results provide no indication that magazines can boost their sales by offering free digital content. However, the results also emphasize that, for most consumers, digital content is not a good substitute for print media. Ninety percent of readers continue to buy the print magazine when the identical content is available on line, for free.
Publications
- No publications reported this period
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Progress 01/01/04 to 12/31/04
Outputs
Over the past 12 months, I did additional data analysis to assess the relationship between a magazine's digital content and its print circulation. I used an internet archive to examine each magazine's website in each year that it existed, from 1996 through 2001. I coded each website on a 1-5 scale reflecting how much content from the current print issue was available for free on the website. I measure the amount of content from the current print magazine as a measure of the substitutability of the digital content for the print content. I analyzed these data by regressing magazine circulation on two alternative measures of the magazine's electronic content. First I considered a simple indicator variable for the presence of a website. This allows me to evaluate how having a Website affects a magazine's print circulation. Second, I considered a variable that takes values from 0-5, corresponding to the scale of digital content described above. A magazine is coded as zero
if it does not offer a website. I find that digital content cannibalizes print sales. On average, having a website reduces a magazine's circulation by about three percent. However, the effect varies with the overlap between the digital and print content. I find strong evidence that allowing readers to read the entire contents of the current issue on line has a negative effect on a magazine's print sales, reducing circulation by 9-11 percent. This finding is robust to a variety of econometric specifications and cannot be explained by contemporaneous price cuts. I also find evidence that offering digital content that overlaps less with the current print issue (original and archived content, a table of contents and article teasers, or access to selected full-length articles from the current issue) cannibalizes print sales. Results indicate that each of these types of content reduces print circulation by 2-3 percent. While these results are less robust, the results fail to reveal any
complementarity between digital and print content. It appears that magazines do not boost their circulation by offering digital content. Although the results indicate that digital content reduces print sales, this does not mean that publishers should never offer digital content. For some magazines, the threat posed by other free content sites may be greater than the threat of cannibalization posed by their own website. These magazines would prefer cannibalization to the alternative that their readers substitute another site's content for their own content: print or digital. Therefore, they should maximize total readership across both media, with less concern for retaining print readers. While digital content offers many advantages over print, there are also a variety of reasons why readers may not view digital content as a good substitute. Despite ongoing technological improvements, digital content remains less convenient than print. While readers can print out digital content, this
reduces the visual quality of the content, and it is sometimes a slow process. Nonetheless, as technology continues to improve, and Internet usage increases, the threat of cannibalization will likely increase.
Impacts
On average, offering free digital content reduces a magazine's print sales. In particular, allowing readers free digital access to the entire contents of the print magazine reduces print sales by about ten percent. The results provide no indication that magazines can boost their sales by offering free digital content. However, the results also emphasize that, for most consumers, digital content is not a good substitute for print media. Ninety percent of readers continue to buy the print magazine when the identical content is available on line, for free.
Publications
- No publications reported this period
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Progress 01/01/03 to 12/31/03
Outputs
Over the past 12 months, I finished analyzing data to assess the relationship between a magazine's electronic content and its print circulation. I used an internet archive to examine each magazine's Website in each year that it existed, from 1996 through 2001. I coded each Website on a 1-5 scale reflecting how much content from the current print issue was available for free on the Website. I measure the amount of content from the current print magazine as a measure of the substitutability of the electronic content for the print content. I analyzed these data by regressing magazine circulation on measures of the magazine's electronic content. Specifically, I first considered a simple indicator variable for the presence of a website. This allows me to evaluate how having a Website affects a magazine's print circulation. Results indicate that electronic content affects the demand for print content. Specifically, when I include the website indicator variable, I find that
offering a website reduces a magazine's print circulation by about two pct. This suggests that electronic content does have a small cannibalizing effect on print sales. However, this provides no insight as to whether different types of electronic content exert different effects on a firm's print circulation. To examine whether the effect on print circulation varies with the type of electronic content, I include indicator variables for each of five levels of electronic content. The results show that offering related content, content that does not appear in the current print issue, reduces print circulation by about 2 pct, which is statistically significant when I control for the magazine's circulation growth over the prior 3 years. Related content includes archived material, interactive tools, content related to the magazine's topic area, information about the magazine, etc. It appears that for a small number of readers, related content can substitute for the print magazine. While
offering an electronic table of contents for the current print issue does not affect print sales, offering an abstract for one or more articles that appear in the current print issue increases circulation by about 3 pct. These results suggest that electronic content can stimulate demand for print magazines. However, more than a table of contents is required. Magazines must offer a teaser to induce readers to buy the magazine. Offering access to current print articles reduces print sales. Specifically, offering access to some, but not all, articles reduces print circulation by about 3 pct. Offering access to the entire contents of the current print issue reduces print sales by 7 pct. These results show that consumers will substitute electronic for print content. However, many readers will only replace print with electronic content if the entire current issue is available digitally. In summary, these results suggest that free content does create a threat of cannibalization. However, a
magazine can control this threat with the type of content that they offer. By offering teasers of what is available in the current print issue, a magazine may actually stimulate demand for the print magazine.
Impacts
Offering free electronic content can reduce a magazine's print sales. But, offering certain kinds of free content, namely teasing what's available in the current print issue, can increase print sales. These findings can help publishers effectively exploit the Internet as a distribution and marketing channel to increase print circulation of their magazines.
Publications
- No publications reported this period
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Progress 01/01/02 to 12/31/02
Outputs
Over the past twelve months, I have finished assembling the data set for one phase of this work. In particular, I have gathered data on the electronic content offered by magazines during the period from 1996-2000. To do so, I used an internet archive that allows one to examine Websites as they appeared in previous years extending back to 1996, and continuing through 2000. I coded each magazine's Website according to the type of electronic content available, distinguishing between magazines that offer content that does not appear in the current print magazine and electronic content that comes out of the current print magazine. I made this distinction because theory suggests that the effects on the demand for print circulation may vary with the type of electronic content offered. To examine the relationship between electronic content and the demand for print circulation, I merged the data set of magazine electronic content with data on magazine circulation and prices.
Doing so, allows me to examine how variation in electronic content affects variation in magazine circulation and prices. One of the challenges in estimating a model of demand for magazine circulation is the need to deal with the endogeneity of prices. To do so, I am estimating a supply and demand system of equations, which also allows me to examine the effect of electronic content on the magazine's supply decision, by estimating a price equation. Preliminary results suggest that electronic content does influence the demand for print circulation. But, the relationship varies for different groups of magazines. Specifically, preliminary results indicate that a magazine's electronic content has a negative impact on demand for larger, better known magazines. However, for smaller magazines, offering electronic content reduces print circulation. Preliminary findings also suggest that the relationship between electronic content and demand for print magazines also varies with the type of
electronic content offered. In particular, it appears that offering electronic content that does not appear in the current print edition of the magazine has a positive effect on the demand for the print magazine, increasing print circulation by about five percent. On the other hand, offering content that appears in the current print magazine may have a negative impact on print circulation. Finally, a small number of magazines offer free access to the entire contents of the current print magazine. Surprisingly, results indicate that offering free access to the full text of the print magazine does not negatively affect print circulation, and may even have a positive effect. On the supply side, the preliminary results are somewhat more consistent. It appears that for both large and small magazines, offering electronic content causes the magazine to charge higher prices for the print content. On average, magazines offering electronic content raised their prices by about 3-5 percent.
Interestingly, it appears that magazines offering full-text electronic increase their print price a greater amount.
Impacts
These results suggest that providers of information/entertainment goods (e.g. magazines, newspapers, music) can offer free digital content without reducing sales of their physical products; it seems that digitized content increases the demand for print magazines. For consumers, these findings suggest that firms will continue to offer free content on line.
Publications
- No publications reported this period
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