Brendan Cunningham

Court Decisions and Equity Markets: Estimating the Value of Copyright Protection

We construct a database of U.S. federal court decisions pertaining to copyright and changes in federal statutory copyright law and use this database to assemble indices measuring changes in the breadth of copyright protection. We combine our indices with information on excess returns to equity from a quarterly panel of firms and estimate how the breadth of copyright affects the market valuation of firm equity. A typical statute that increases copyright breadth generates an increase in a firm’s excess return to equity of 40–209 basis points, depending on the exact time frame, the size of the firm, and the importance of the change in statutory law. A typical high‐court decision expanding copyright generates a 13–105 basis‐point increase in excess returns. Our results are robust across 4–5‐year subsamples and the size distribution of firms. Our statutory findings are strongest in the most recent portion of the sample.

The Distributional Heterogeneity of Growth Effects: Some Evidence

This paper applies quantile regression and non-parametric density estimation techniques to international data on long-run economic growth. The approach reveals that previously identified drivers of growth vary in their impact across the conditional distribution of international growth. Specifically, these factors display disparate effects in conditional low-growth and high-growth contexts. The results suggest that there is a general bias underlying prior research. The incumbent drivers of growth exhibit relatively larger coefficients, in absolute value, on the upper tail of the conditional growth distribution. This set of stylized facts identifies factors that might alter the international distribution of growth.

Diversity in Broadcast Television: An Empirical Study of Local News

The relation between the structure of a market and the diversity of its product offering has been extensively explored by theorists. We develop 2 measures of diversity and explore the content of local news for 60 stations and 20 designated market areas (DMAs) in the United States. Using a relative station-level diversity metric, ordinary least squares (OLS) estimates imply that relative diversity of local news content decreases as market concentration increases. This result is not, however, robust to an instrumental variables specification. Using a total market diversity metric, the Herfindahl-Hirschman Index (Hirshman, 1964) is significant in OLS and robust to instrumental variable estimation. Because the total market diversity metric is arguably superior to the incremental metric as a measure of overall diversity, this result is useful-it suggests that the total diversity of local news content within a DMA is sensitive to the level of concentration.

Standards, Technology Adoption, and Ownership—But Not All in One Place

In this issue of the Journal of Media Economics we have three very different articles. One revisits the frequent issue of technology standards, a second explores diffusion of innovation, and a third examines regulatory and technology consequences. To a great extent, they each expand our understanding and appreciation of frequently raised issues in the field of media structure, regulation, and performance.

Scholars Help Answer John Wanamaker's Query: Which Half of My Advertising Is Wasted?

This issue’s research touches on one of the most important issues that matters to the media industry: audience size. This was not part of a plan or issue theme. It just happened that the three articles and book review that were next in the queue for publication happened to share this common thread. By most other criteria, they are quite different from one another. Of course, audience size is a critical factor for all manner of media. In the canonical profit maximization problem, a firm’s decisions are driven by marginal cost. In media, whether a theatrical film, a television show, or a publication—even an online publication—the overwhelming bulk of the costs are fixed and tied up in creating the content. The marginal costs associated with additional users or viewers ranges from low (for a print publication) to almost not measurable (for a broadcaster or Web site). From a cost perspective, there is little reason not to pursue larger audiences. Two additional considerations drive media firms to increase their audience size. If advertising is a source of revenue, the content can attract greater revenue for more viewers, listeners, or readers. Direct consumer revenue (admission, subscription, and per copy) is proportional to content sales. Therefore, media enterprises are always looking for help in increasing the size of their audiences. John Wanamaker, the 19th merchant who founded department stores under his name in Philadelphia and New York, has been famously credited with holding that, “Half my advertising is wasted. I just don’t know which half.” The Internet has provided that information for online advertisers, as they can now track ad exposure; attention; and, in many cases, sales. However, this process is imperfect for advertisers in older formats, who still wrestle with Wanamaker’s quandary.

Nonprofit Models, Media Ownership and Diversity, and Advertising Prices

There are three excellent articles in this issue of the Journal of Media Economics. The most unusual of the three is Miles Maguire’s (2009) article, “The Nonprofit Business Model: Empirical Evidence from the Magazine Industry.” It is different for two reasons. One is that we see relatively little research these days drawn from the magazine business. But, most atypical is that the research happens to coincide with a current curiosity about the viability of a nonprofit business model for the legacy media business. Rarely does academic research coincide with concurrent surfacing of a new issue in the popular media. Maguire’s (2009) piece arrived 2 months before an op-ed article in The New York Times (Swensen & Schmidt, 2009) started the buzz about the attraction of a nonprofit model (see also http://www.nytimes.com/2009/01/28/opinion/28swensen.html). The authors of the Times piece, both from the world of finance, proposed an endowment might be established for a media company, in their case, newspapers. As nonprofits, they “would benefit from Section 501(c)(3) of the I.R.S. code” (p. A31). This status would

Three Industries, Three Issues, But a Common Thread of Solid Analytics

This issue of the Journal of Media Economics offers up three very disparate research threads, covering three different industry segments and as many unconnected issues. What they have in common are solid analytics that contribute yet fresh pieces to its unique jigsaw puzzle. In “Consequences of Vertical Separation and Monopoly: Evidence From the Telecom Privatizations,” Bruno E. Viani is concerned with how regulations effect recently privatized telecoms carriers around the world. Guan Ru Chen helps marketers with an understanding of the relation among advertising, pricing, and profit in “The Threshold Effect of Advertising on the Intensity of Price Promotions: Using a Rational Expectations Model”; and Xiaofei Wang and David Waterman add insight into a long-standing policy issue in the United States by delving into “Market Size, Preference Externalities, and the Availability of Foreign Language Radio Programming in the United States.”

Editors' Preface: Think Global. Drink Local. National Studies with Transnational Appeal

This issue of the Journal of Media Economics features four articles from authors based in four countries in Asia, Europe, and North America. We make note of this to highlight the truly global nature of the field of media economics. One explanation for this phenomenon might be that there was a time, not so long ago, when electronic media in most of the world outside North America were government owned or controlled. Thus, much of the research was more about the public service aspect of those providers. With not only privatization, but the explosion of other conduits for electronic content—cable; satellite; and, most recently, the Internet—the landscape for many researchers has broadened beyond the traditional print media. Although most of the research that comes our way tends to be rooted in the media of a particular society—in this issue, we have Japan, Korea, the Netherlands, and the United States— as editors, we look for research where the relations, the trends, the findings, the methodologies, and the implications transcend the particular uniqueness of any one nation’s laws, policies, or structures. The four articles in this issue are perfect examples.

Editors' Preface: A Fresh Application of Network Analysis on Audience Behavior and a Double Helping of Media Integration Implications

Over the past 3 years, we have remarked in this space from time to time about what we seek in the research that we send to reviewers. Although the final decision will always have an element of subjectivity, two qualities in the best articles are (a) a real contribution to theory or evidence regarding media economics and (b) immediate and practical policy relevance. Few articles offer both, but they should have one of these qualities. The three articles in this issue of the Journal of Media Economics certainly do. Thomas B. Ksiazek’s article, “A Network Analytic Approach to Understanding Cross-Platform Audience Behavior,” in fact, has a strong element of both advancing methodology and policy. If the application of network analysis he applies to media content finds broader adoption, it might help address many speculative questions that have been bandied about on the implications of both the Internet and the larger number of news and entertainment sources we have today. The issues raised by Ahreum Hong, Daeho Lee, and Junseok Hwang; and Claudio A. Agostini and Eduardo H. Saavedra in their respective articles are more narrowly focused, but nonetheless have practical policy implications. Both are looking at the outcome of the constant mergers and acquisitions in media industries (and, inversely, divestitures). These often result in real or potential lessening of competition through horizontal or vertical integration within a media segment. Although both find that there are economic consequences in the cable and theatrical film distribution areas, respectively, they stop short of what they mean for corporate strategy or public policymakers. Indeed, it would be up to such actors to use the authors’ findings to address questions before them.

Bundling, Books, and Trust

Media economics may sound like a very specific sub-discipline, but in fact it is a simple label for an almost unwieldy range of subjects and methodologies. It encompasses economic theories with some related industry as an example; or, it can start with a media issue that is best addressed through an approach from the world of economists. Research that comes to the Journal of Media Economics (JME) is sometimes sent to us by trained economists who take an interest in a media issue and, other times, from mass communications specialists addressing issues using the tools from the economists’ tool bag. This observation surfaced in light of the three articles selected for this issue of JME. In “Bundling Information Goods Under Endogenous Quality Choice,” Nodir Adilov is clearly taking the economists’ approach. The issue of bundling of goods or services is a generic one, but Adilov adopts the cable industry as an illustrative case for investigating the implications of endogenous quality choice when information goods are bundled and analyzes the welfare effects of regulation that forces firms to unbundle products in an a la carte fashion. In their article, “Success Drivers of Fiction Books: An Empirical Analysis of Hardcover and Paperback Editions in Germany,” Christina Schmidt-Stölting, Eva Blömeke, and Michel Clement start from a mass media problem: What determines the financial success of published books, particularly fiction? To derive some insights from their dataset, the authors reach into the econometrics tool kit and find that a seemingly unrelated regression (SUR) model would be appropriate. Then, just when we think we have a handle on the types of contributors to our literature, we find a submission like Füllbrunn, Richwien, and Sadrieh’s “Trust and Trustworthiness in Anonymous Virtual Worlds.” This is neither fish nor fowl, neither the world of economists as we expect it, nor the traditional media as we have known it. The experimental methodology here comes out of the social sciences, augmented by some innovative touches needed for exploring such uncharted territory.