Consumer Co-Creation of Digital Culture Products: Business Threat or New Opportunity?
New forms of implicit consumer collaborations in online communities and social networks influence demand preferences as consumers increasingly participate in the creation of cultural products themselves by contributing user-generated content (thus complementing and competing with firm offerings). While research findings on these issues vary there is strong evidence from both theoretical and empirical research that the increased technology affordance at the consumer side challenges the profitability of conventional producer strategies that are based on pushing product designs to large segments of consumers while ignoring to service nuances in consumer demand patterns. Our study presents a design of an experimental economy where producers create and sell original digital culture products and examines the impact of consumer co-creation in the presence of consumer sharing (piracy) on market performance in terms of consumer and producer surplus and consumer choice. Using methods of experimental economics, we find that (1) consumer sharing interacts with consumer-based co-creation and increases product variety and consumer surplus while reducing producer benefits from co-creation and (2) social welfare benefits are robust in the presence of low to moderate consumer sharing.
Karl R. Lang is a Professor in Information Systems at the Zicklin School of Business, Baruch College, CUNY. He holds a Ph.D. in Management Science from the University of Texas at Austin. Dr. Lang’s research interests include management of digital businesses, experimental economics, and issues related to the newly arising informational society. He held previous positions at the Free University of Berlin in Germany and the Hong Kong University of Science and Technology (HKUST). His findings have been published in diverse journals, including Journal of Management Information Systems, Communications of the ACM, Decision Support Systems, Long Range Planning, Computational Economics, and Annals of Operations Research. He is an associate editor of Decision Support Systems, Information & Management, and Electronic Commerce Research and Applications