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Cinematic Explosion: New Products, Unpredictabilty and Realized Quality in the Digital Era
Author(s) -
Waldfogel Joel
Publication year - 2016
Publication title -
the journal of industrial economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.93
H-Index - 77
eISSN - 1467-6451
pISSN - 0022-1821
DOI - 10.1111/joie.12117
Subject(s) - revenue , quality (philosophy) , product (mathematics) , promotion (chess) , digital era , advertising , appeal , business , production (economics) , marketing , music industry , studio , creative industries , market share , distribution (mathematics) , exhibition , film industry , commerce , economics , movie theater , the internet , art , political science , visual arts , computer science , world wide web , law , philosophy , epistemology , mathematics , macroeconomics , music education , mathematical analysis , geometry , accounting , politics
While file sharing has undermined firms’ ability to generate revenue for their products, other technological change has reduced entry barriers in cultural industries, with substantial positive impacts on the availability of new books and recorded music. Unpredictability of product quality is a generic feature of cultural goods, including music, books and movies, so an infusion of new products holds the possibility of bringing not just low‐appeal products but also new products that consumers find highly appealing. This paper explores the effects of reduced costs of production, promotion and distribution in the motion picture industry, asking four questions. First, we document substantial growth in the number of movies brought to market, particularly since the early 2000's. Second, we document growth in institutions by which consumers can discover new movies, many of which are produced outside of the major studios and not released in theaters. Third, we show that the new independent movies account for a growing share of commercially successful movies. Finally, we present evidence, based on both critical assessments and usage, that recent vintages are more appealing to consumers than earlier offerings. These findings on movies echo developments documented elsewhere for recorded music and books.