Digitization and the Demand for Physical Works

On October 24, 2018 at 4:15 pm in Pettengill G21, Imke Reimers from the Department of Economics, Northeastern University presented her talk on “Digitization and the Demand for Physical Works: Evidence from the Google Books Project.”

Talk Topics:
> Does the substitution effect of the digital products outweigh the discovery effect from aggregation of information?

> Do the mechanisms behind these effects depend on product attributes?

Abstract: Paper co-authored with Abhishek Nagaraj (UC Berkeley)
Despite the promise of digitization to deliver a centralized, digital repository of all books ever published, copyright challenges have prevented the realization of this vision. Copyright holders are concerned that digitization might cannibalize demand for printed works by lowering readership and sales, although this claim lacks empirical evidence. We shed light on this topic using newly-collected data on the digitization of books from Harvard’s Widener Library by the Google Books project between 2005 and 2009. We exploit the quasi-random timing of the digitization process across books to estimate the causal impact of digitization on readership and sales and evaluate the results in light of a simple theoretical framework. We find that digitization reduces readership within Harvard by 38\%, but, contrary to some predictions, it increases sales of digitized titles by about 36\%. In keeping with our theory, this overall sales effect can be explained by increased discovery for less popular titles; sales for a small set of popular titles decrease following digitization, but sales for less popular titles increase considerably. Overall, our evidence suggests that rather than losing revenue from digital distribution, copyright holders might benefit from digitization through increased discovery for less popular works.

Sponsored by The Casey Lecture Fund for Economics