How Video Rental Patterns Change as Consumers Move Online
Zentner, Alejandro, Michael D. Smith, Cuneyd Kaya. 2013. How Video Rental Patterns Change as Consumers Move Online. Management Science. 59(11) 2622-2634.
QUESTION: How do consumption patterns change when consumers move from brick-and-mortar to Internet markets?”
RESULT: “When consumers move from brick-and-mortar to online channels they are significantly more likely to rent ‘niche’ titles relative to ‘blockbusters’.”
Long Tails and Superstars: The Effect of IT on Product Variety and Sales Concentration Patterns
Brynjolfsson, Erik, Yu Hu, Michael D. Smith. 2010. Long Tails and Superstars: The Effect of IT on Product Variety and Sales Concentration Patterns. Information Systems Research 20th Anniversary Special Issue, 21(4) 736-747.
QUESTION: What does the academic literature tell us about the impact of long tail markets on consumer behavior and producer surplus?
RESULT: “IT has played a central role in this increase in the supply and demand of niche products, creating a ‘Long Tail’ in the distribution of product sales. At the same time, many markets can be increasingly described as ‘Superstar’ or ‘winner-take-all’ markets where blockbusters products dominate sales. Such changes in production and consumption patterns across niche and blockbuster products portend profound effects on competition and market structure.”
Consumer Surplus in the Digital Economy Estimating the Value of Increased Product Variety
Brynjolfsson, Erik, Yu Hu, Michael Smith. 2003. Consumer Surplus in the Digital Economy: Estimating the Value of Increased Product Variety. Management Science, 49(11) 1580-1596. (Reprinted in The International Library of Critical Writings in Economics, Economics of E-Commerce, Baye and Morgan, eds. 2015.)
QUESTION: What is the economic impact of increased product variety made available through electronic markets?
RESULT: Increased product variety of online bookstores enhanced consumer welfare by $731 million to $1.03 billion in the year 2000, which is between 7 and 10 times as large as the consumer welfare gain from increased competition and lower prices in this market.
From Niches to Riches: The Anatomy of the Long Tail
Brynjolfsson, Erik, Yu “Jeffrey” Hu, Michael D. Smith. 2006. From Niches to Riches: The Anatomy of the Long Tail. Sloan Management Review, 47(4 Summer) 67-71.
QUESTION: For managers, what factors are driving the emergence of the Long Tail and what are the implications of this change for the structure of markets?
RESULTS: The paper identifies several first-order and second-order drivers of supply-side and demand-side changes. These include the supply-side changes of increased virtual shelf space for online retailers and increased incentives for firms to develop niche products and demand-side changes of powerful tools for search and product discovery and changes in consumer tastes from increased product availability.