Digitization and the Demand for Physical Works: Evidence from the Google Books Project (joint work with Abhishek Nagaraj)
How does free digital distribution affect physical sales? We argue that, when accompanied with search technologies (like full-text search inside books), free digital distribution might allow for the discovery of new content and boost, rather than replace, physical sales. To test this idea, we examine the impact of the Google Books digitization project on physical sales. We exploit a unique natural experiment from Harvard Libraries, which seeded the Google Books project, and where we can track and exploit variation in the timing of book-level digitization between 2005-2009. We find that digitization boosts sales of physical editions of books. Consistent with the discovery channel, digitization is particularly effective in increasing sales for less popular books and can increase the sales of a digitized author's non-digitized books. In addition to its effect on increasing demand for existing editions, we examine and find that digitization allows distributors (and especially independent publishers) to discover new content and introduce new editions for existing books, further increasing sales. The results point to the potential of search-enabled digital distribution technologies to stimulate, rather than cannibalize, demand and encourage entry in the market for physical products.
Meeting ID: 939 5089 9161