Mortimer (2007)

From Copyright EVIDENCE

Advertising Architectural Publishing of books, periodicals and other publishing Programming and broadcasting Computer programming Computer consultancy Creative, arts and entertainment Cultural education

Film and motion pictures Sound recording and music publishing Photographic activities PR and communication Software publishing (including video games) Specialised design Television programmes Translation and interpretation

1. Relationship between protection (subject matter/term/scope) and supply/economic development/growth/welfare 2. Relationship between creative process and protection - what motivates creators (e.g. attribution; control; remuneration; time allocation)? 3. Harmony of interest assumption between authors and publishers (creators and producers/investors) 4. Effects of protection on industry structure (e.g. oligopolies; competition; economics of superstars; business models; technology adoption) 5. Understanding consumption/use (e.g. determinants of unlawful behaviour; user-generated content; social media)

A. Nature and Scope of exclusive rights (hyperlinking/browsing; reproduction right) B. Exceptions (distinguish innovation and public policy purposes; open-ended/closed list; commercial/non-commercial distinction) C. Mass digitisation/orphan works (non-use; extended collective licensing) D. Licensing and Business models (collecting societies; meta data; exchanges/hubs; windowing; crossborder availability) E. Fair remuneration (levies; copyright contracts) F. Enforcement (quantifying infringement; criminal sanctions; intermediary liability; graduated response; litigation and court data; commercial/non-commercial distinction; education and awareness)

Source Details

Mortimer (2007)
Title: Price Discrimination, Copyright Law, and Technological Innovation: Evidence From The Introduction of DVDs
Author(s): Mortimer, J. H.
Year: 2007
Citation: Mortimer, J. H. (2005). Price discrimination, copyright law, and technological innovation: Evidence from the introduction of DVDs (No. w11676). National Bureau of Economic Research.
Link(s): Definitive , Open Access
Key Related Studies:
Discipline:
Linked by:
About the Data
Data Description: The primary dataset used for this study is a new dataset of DVD and VHS rental and sales transactions at video retail stores provided by Rentrak Corporation.The dataset contains transactions at 4,341 stores from January 2000 through June 2002. I eliminate 2,128 stores that did not carry most major titles because they exited the database at an early date or entered the database at a late date. This leaves 2,213 video retail stores. For all stores, I observe the zip code location.

To observe (or at least proxy for) local competitive conditions, I use Yellow Pages listings for all video retail stores in the United States, including Blockbuster and Hollywood Video stores, for 2000 through 2002. From these data, I identify the total number of video retail stores within the same zip code of each observed store in the Rentrak database. In addition, I utilize data from the 2000 U. S. Census on the demographic characteristics of each zip code.

Data Type: Primary and Secondary data
Secondary Data Sources:
Data Collection Methods:
Data Analysis Methods:
Industry(ies):
Country(ies):
Cross Country Study?: No
Comparative Study?: No
Literature review?: No
Government or policy study?: No
Time Period(s) of Collection:
  • January 2000 - December 2001
Funder(s):

Abstract

U. S. copyright law effectively prevents direct price discrimination for copyright holders that sell to different markets. In response, these firms can engage in indirect price discrimination. I derive theoretical predictions about the use of indirect price discrimination, and I analyze how optimal pricing strategies differ for different products. Using data on VHS and DVD movie distribution, I find that firms’ pricing choices are consistent with the predictions of theory and that firms’ use of indirect price discrimination benefits consumers (but harms ancillary retailers). Finally, I examine what optimal pricing strategies might look like in a legal environment that permits direct price discrimination.

Main Results of the Study

Decision to price discriminate depends on the expected costs and benefits of doing so,and empirical evidence shows that firms account for the costs and benefits of indirect price discrimination when choosing their optimal pricing strategies. Specifically, both demographic effects and product quality levels differ across the VHS and DVD formats and contribute to the different pricing strategies chosen for these two formats. However, the most important difference for explaining firms’ pricing decisions seems to be the relative value of owning a movie, which varies by movie and also by format.Welfare effects of the current price discrimination strategies used by firms in the United States is also examined and found that indirect price discrimination benefits copyright holders but generally harms retailers. Consumer welfare is highest under the current price discrimination strategies in use; thus, for some titles, indirect price discrimination benefits consumers, while for other titles, consumers are made worse off by this form of price discrimination.Welfare effects of an alternative form of copyright protection is also estimated that would allow for direct price discrimination, and found that price discrimination under this law tends to benefit copyright holders and consumers at the expense of retailers.

Policy Implications as Stated By Author

Coverage of Study

Coverage of Fundamental Issues
Issue Included within Study
Relationship between protection (subject matter/term/scope) and supply/economic development/growth/welfare
Green-tick.png
Relationship between creative process and protection - what motivates creators (e.g. attribution; control; remuneration; time allocation)?
Harmony of interest assumption between authors and publishers (creators and producers/investors)
Effects of protection on industry structure (e.g. oligopolies; competition; economics of superstars; business models; technology adoption)
Understanding consumption/use (e.g. determinants of unlawful behaviour; user-generated content; social media)
Coverage of Evidence Based Policies
Issue Included within Study
Nature and Scope of exclusive rights (hyperlinking/browsing; reproduction right)
Green-tick.png
Exceptions (distinguish innovation and public policy purposes; open-ended/closed list; commercial/non-commercial distinction)
Mass digitisation/orphan works (non-use; extended collective licensing)
Licensing and Business models (collecting societies; meta data; exchanges/hubs; windowing; crossborder availability)
Green-tick.png
Fair remuneration (levies; copyright contracts)
Enforcement (quantifying infringement; criminal sanctions; intermediary liability; graduated response; litigation and court data; commercial/non-commercial distinction; education and awareness)

Datasets

Sample size: 23213
Level of aggregation: Rental Priced
Period of material under study: 2000-2001