TY  - BOOK
AU  - Koschmann,Anthony
AU  - Qian,Yi
ED  - National Bureau of Economic Research.
TI  - Latent Estimation of Piracy Quality and its Effect on Revenues and Distribution: The Case of Motion Pictures 
T2  - NBER working paper series
PY  - 2020///
CY  - Cambridge, Mass.
PB  - National Bureau of Economic Research
N1  - August 2020; Hardcopy version available to institutional subscribers
N2  - Conventional wisdom holds that illegal copies cannibalize legitimate sales, even though previous research has found mixed effects, with illegal copies acting as both a substitute and complement. Yet, a relatively unexamined aspect to date is the quality of illegal copies. Building on product uncertainty and production quality, we propose that higher quality copies can benefit sales when product uncertainty is high, such as during the launch period. Using motion picture and online piracy data, we estimate piracy quality using a latent item response theory (IRT) model based on keyword signals in the copies. An interdependent system jointly estimates movie screens, revenues, downloads, and available illegal copies with piracy quality in both the launch and post-launch periods. We find that at launch, when rather little is known about the movie, higher quality illegal copies demonstrate a positive effect on revenues (sampling). In the post-launch period, however, higher quality illegal copies exhibit a negative effect on revenues (substitution). The findings suggest producers can alleviate product uncertainty through higher quality samples at product launch while diluting piracy quality post-launch
UR  - https://www.nber.org/papers/w27649
UR  - http://dx.doi.org/10.3386/w27649
ER  -