Alejandro Zentner

Clash of the Titans: Does Internet Use Reduce Television Viewing?

We examine the impact of the Internet on the leading American recreation activity: watching television. We run a panel regression using television viewing, Internet penetration, and socioeconomic variables for a large number of American cities starting before the birth of the Web. We find that the Internets effect on television viewing varies by age group, reducing it by a moderate amount for the youngest Americans but having no impact on the viewing of the oldest Americans. We hypothesize that the overall effect is likely to increase over time as older age groups have more experience with the Internets recreational opportunities.

Online Sales, Internet Use, File Sharing, and the Decline of Retail Music Specialty Stores

This paper uses phonebook records of music retailers in the United States for the years 1998 and 2002 to examine how Internet use, file sharing, and online sales of records have affected the entry and exit of brick and mortar music specialty retailers. By merging music store information with data on Internet activity and broadband connectedness at the Metropolitan Statistical Area (MSA) level, with the number of broadband providers at the zip code level, and with a database of the location of universities, I analyze how online purchases, broadband, and Internet use affected the survival probability and the change in the number of music stores between 1998 and 2002. I further study whether the number of employees and chain membership affected the survival probability. I find that broadband connectedness increased the death rate of brick and mortar music stores and reduced their number. I also find that the presence of a university led to a reduction in the number of music specialty stores in the zip code.

How Video Rental Patterns Change as Consumers Move Online

How will consumption patterns for popular and “long-tail” products change when consumers move from brick-and-mortar to Internet markets? We address this question using customer-level panel data obtained from a national video rental chain as it was closing many of its local stores. These data allow us to use the closure of a consumers local video store as an instrument, breaking the inherent endogeneity between channel choice and product choice. Our results suggest that when consumers move from brick-and-mortar to online channels, they are significantly more likely to rent “niche” titles relative to “blockbusters.” This suggests that a significant amount of niche product consumption online is due to the direct influence of the channel on consumer behavior, not just due to selection effects from the types of consumers who decide to use the Internet channel or the types of products that consumers decide to purchase online. This paper was accepted by Pradeep Chintagunta, marketing.

Measuring the Impact of File Sharing on the Movie Industry: An Empirical Analysis Using a Panel of Countries

The music industry has struggled during the past decade due to file sharing and movie business executives fear the same fate. This paper seeks to provide measurements of the effects of peer-to-peer file sharing on the movie industry. We use a long panel of data at the country level containing information on theatrical, video rental, and video retail movie commercial performances, as well as Internet and broadband penetration. We compare the impacts of increased high-speed online connectedness replacing slow-speed Internet connectedness before and after the introduction of the second-generation file sharing technology that has made movie file sharing feasible. This empirical strategy allows us to isolate the effects of file sharing from any other possible Internet impacts on the commercial performance of movies unrelated to file sharing. Our results indicate that the effect of peer-to-peer file sharing is negative and large on video sales, but we do not have confidence regarding the impacts of file sharing on either the theatrical commercial performance of movies or video rentals.

Internet Adoption and Advertising Expenditures on Traditional Media: An Empirical Analysis Using a Panel of Countries

The Internet can affect advertising expenditures through various channels. This paper quantifies the relationships between Internet adoption and changes in advertising expenditures on traditional offline media types. I use a panel of 11 years of data at the country level that contains information on advertising expenditures by medium and Internet penetration for more than 80 countries. I find that increases in Internet penetration are negatively correlated with changes in advertising expenditures on newspapers, magazines, and television, but I do not find conclusive results for the correlation between Internet adoption and changes in advertising expenditures on radio.

Internet Adoption and the Survival of Print Newspapers: A Country-Level Examination

In this paper we examine the effect of Internet adoption on daily print newspaper circulation and newspaper survival rates. We use country-level yearly panel data for more than ninety countries from 2000 through 2009. Our data contain information on Internet penetration, daily local and national print newspaper circulation, and the number of local and national print newspaper titles. Our results show that increases in Internet penetration can explain a large fraction of the recent decline in newspaper circulation and the number of newspaper titles. We also find that Internet adoption appears to affect the survival of local newspapers to a greater extent than for national newspapers. We argue that this might be due to local newspapers’ greater reliance on classified advertising. Our results further suggest that Internet adoption decreases country-level circulation rates by driving newspapers out of business without significantly affecting the net circulation rates of surviving newspapers. Because newspaper readership has been linked to the health of the democratic system, the importance of examining the decline of the newspaper industry extends beyond the literature on the media industry.

Measuring E-Commerce Concentration Effects When Product Popularity is Channel-Specific

This paper uses household-level panel data from three large apparel retailers to examine how e-commerce affects the concentration of sales across products. In our data there are remarkable differences between the products that are popular in online versus offline channels. When the relative popularity of products differs by channel, as in our data, we demonstrate that the traditional long tail metrics used in the literature provide biased results regarding changes to the concentration of sales caused by the growth in online sales. We propose an alternative metric that allows us to measure concentration effects when product popularity varies by channel. Our results demonstrate that ignoring differences in product popularity across channels can lead to erroneous conclusions regarding whether e-commerce increases or decreases the concentration of sales across products. Examining how the migration of consumers from brick and mortar to online channels affects the anatomy of their purchases is important for guiding managerial practice.

Measuring the effect of internet adoption on paper consumption

A large fraction of the total supply of paper is produced with technologies that have serious adverse consequences on the environment and cause significant health problems, such as cancer. This paper reports on how Internet adoption affects paper consumption. The study used country-level panel data on Internet penetration and paper consumption disaggregated into various paper categories. The empirical strategy is to use fixed-effect models to study whether countries with faster Internet penetration growth have experienced faster declines in paper consumption. The analysis finds that Internet penetration significantly decreases aggregate paper consumption. Further, the estimates show that Internet growth reduces consumption for the paper categories that are more likely to be affected by the diffusion of the Internet (paper used to print newspapers and books and magazines), whereas the growth of the Internet does not have a statistically significant impact on a paper category unlikely to be affected by the Internet (such as sanitary paper).

The Internet as a Celestial TiVo

It appears that the Internet is soon going to fulfill its potential to become a giant on-demand repository of television shows (and movies) available asynchronously. As companies such as Netflix and Hulu increase their activities in this sphere, there are many unanswered questions about the impacts of this transition. In this paper we attempt to foretell the impact of this shift on one key aspect of television viewing: the amount of time viewers devote to it. We use cable and satellite television’s impact on viewing as a proxy for the likely impact that future Internet transmission of programs will have. Using country-based panel data going back to the mid 1990s we find that the increased variety brought about by cable and satellite has had virtually no impact on time devoted to television viewing. We discuss the import of this finding for Internet business models of television transmission.

The Effect of the Internet on Advertising Expenditures: An Empirical Analysis Using a Panel of Countries

The Internet can affect advertising expenditures through various channels. Although the traditional news media perceives the increase in Internet use as a challenge to their survival, the effect of the Internet on the assignment of advertising budgets across media outlets is unclear. For example, offline advertising can induce search engine use making online and offline advertising complements. The impact of the Internet on advertising expenditures is also uncertain because the Internet: has made media available for many individuals in places where their consumption was previously either banned or technologically infeasible (e.g. work or mobile), has reduced waste impressions by improving advertising targeting, has changed the nature of many commercial transactions that now obviate the need for paid advertising (e.g. Craigslist), and may also affect advertising equilibrium prices. This paper quantifies the effect of the increase in Internet use on advertising expenditures for both individual media types and overall. I use a panel of ten years of data at the country level containing information on advertising expenditures by medium and Internet penetration for more than eighty countries. I find that the Internet reduced advertising expenditures on both television and print media (newspapers and magazines), but had no effect on radio expenditures. I also find that the Internet reduced total advertising expenditures, including expenditures on both traditional media and the Internet.