The Impact of E-book Distribution on Print Sales: Analysis of a Natural Experiment

Abstract

Digital distribution channels introduce several new strategic questions for the creative industries. Two notable questions are (1) how will participation in digital channels impact physical sales, and (2) where should digital releases occur relative to existing "physical" release dates. These questions are particularly salient for book publishing where firms have expressed concern that making ebooks available alongside hardcover titles may cannibalize hardcover sales.We analyze the impact of ebook availability on physical sales using a natural experiment that occurred between April and June 2010. Across all titles we find that delaying ebook availability results in a small (and statistically insignificant) increase in print sales and a large decrease in total ebook sales. However, we also find this effect is moderated by consumers' brand awareness and digital channel preference: delaying Kindle availability for books with strong brand awareness and weak digital channel preference results in a statistically significant increase in print sales for those titles.These results contribute to a growing academic literature analyzing the impact of digitization on marketing strategies in the media industries. Our results also highlight the usefulness of natural experiments derived from rapidly changing media distribution environments for identifying the impact of digital distribution channels on sales.

Complementors' engagement in an ecosystem: A study of publishers' e‐book offerings on Amazon Kindle

“…Assessing the cannibalization between physical and digital products is an area of active research (e.g., Chen et al, ). While we add to this literature by focusing the ecosystem‐level cannibalization, our assessment of cannibalization at the product level yields inconclusive results.…”

“…Therefore, the null expectation would be that publishers engage with Kindle and place all contents there as long as the additional revenues or cost savings cover the digitization cost. In contrast, if publishers eschew engagement with or make discriminating content choices on Kindle, this could signal that a strategic tension exists between the publishers and Kindle as we posited, or conflicts between sales channels such as cannibalization (e.g., Chen et al, 2019;Frazier, 1999).…”

“…We ground our argument on the notion that publishers have a long‐run expectation that network effects will enable the digital channel to dominate the physical channel, which is a form of cannibalization at the channel level. However, publishers might also be concerned about cannibalization at the product level—releasing a Kindle e‐book reduces the sales of the printed version of the same title (Chen et al, ; Li, ). The presence of product‐level cannibalization could reduce the immediate overall profitability of the publisher, and thus result in the withholding decision.…”

“…Indeed, analysts at Sanford C. Bernstein & Co estimated that in 2009, publishers made about eight times more on digital books than on print books (Sherman, ) . Moreover, prior research suggests that Kindle can expand the market for books (Chen et al, ; Li, ), which could increase publishers total profits. In total, evidence suggests that releasing books on Kindle should increase publisher profitability rather than decrease it.…”

“…Finally, we contribute to the growing empirical research on the impact of digital innovations on information products such as music (e.g., Waldfogel, ), television (e.g., Waldfogel, ), movies (e.g., Waldfogel, ), and newspapers (e.g., Seamans & Zhu, ). Given the historical and continuing importance of book publishing, our study adds to the relatively scarce literature on how this industry operates in the digital age (Chen, Ho, & Smith, ; Gilbert, ; Waldfogel & Reimers, ). Our findings on publishers managing their engagements in both the physical and the digital ecosystems are indicative of the business challenges as well as the opportunities complementors face today.…”