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WORK TITLE: Streaming, Sharing, Stealing
WORK NOTES: with Rahul Telang
PSEUDONYM(S):
BIRTHDATE: 1968
WEBSITE: http://www.smithtelang.com/
CITY:
STATE:
COUNTRY:
NATIONALITY:
http://mds.heinz.cmu.edu/ * http://www.heinz.cmu.edu/faculty-and-research/faculty-profiles/faculty-details/index.aspx?faculty_id=92 * https://www.linkedin.com/in/msmith17/
RESEARCHER NOTES:
PERSONAL
Born 1968.
EDUCATION:University of Maryland, B.S. and M.S.; MIT, Sloan School of Management, Ph.D.
ADDRESS
CAREER
Carnegie Mellon University, Heinz College and Tepper School of Business, professor of information technology and marketing. Formerly worked for GTE.
WRITINGS
Contributor to journals and periodicals, including Harvard Business Review, Sloan Management Review, Economist, Wall Street Journal, New York Times, Wired, and Business Week.
SIDELIGHTS
Michael D. Smith is a professor of information technology and marketing at Carnegie Mellon University. Together with fellow Carnegie Mellon professor Rahul Telang, he has written Streaming, Sharing, Stealing: Big Data and the Future of Entertainment, about the massive changes in the film and TV industries.
In Streaming, Sharing, Stealing, Telang and Smith relate how in “the old days,” executives would approve a pilot for a show, order a few trial episodes, and broadcast them at the same time every week on television sets. Then along came House of Cards, a program produced by Netflix. Netflix bought the program sight unseen and gave it a two-year initial run. Instead of running it on a once-a-week basis, Netflix released all thirteen episodes of the first season at the same time, allowing viewers to watch on their TVs, computers, tablets, and phones. The experiment was wildly successful, leading other companies, such as Amazon, Hulu, and others, to follow suit and leaving the more traditional companies to scramble in an attempt to catch up. Because of the Netflix experiment with House of Cards, the whole TV industry was turned upside down. Telang and Smith discuss how everything is affected in not only the TV industry but also books and music and how Netflix, along with Amazon and Apple, is changing the face of media in the world. The major players in these industries are scrambling to adapt in order to survive.
A Publishers Weekly reviewer found the book lacking in perspective and taking a one-sided approach and wrote: “Readers would be better served by a more balanced and updated view of traditional industries’ problems and possible solutions to them.” Financial Times Online contributor Jane Wild had a more positive reaction to the book and commented: “In one sense, Streaming, Sharing, Stealing highlights what the seasoned marketer has always known: the immense value of knowing your customer. Yet this study of the triumph of data is still much needed, as evidenced by the many executives who refuse to believe that the age of ‘gut instinct’ and the ‘taste maker’ has passed. The upshot for businesses is clear: change is happening and the way to ensure your business survives is to be ready to adapt and take bold decisions—just as Netflix did with its one hundred million dollar bet on a series the industry said would never work.”
A contributor on the Now Appearing Web site wrote that Streaming, Sharing, Stealing “does offer a little hope for the beleaguered publishers and studios as long as they can change their mindset—but it also seems likely that they will be like Kodak in the photography business, leaving it too late.” The reviewer added: “If you are interested in the media and how the digital age is threatening the old world and transforming our entertainment environment, you need to read this book.”
Bob Morris, writing on the Blogging on Business Web site, reported that “Smith and Telang have much of value to say about how and why data analytics and Big Data have transformed the entertainment industry and leveled that playing field.” Morris continued: “This is a ‘must read’ for C-level executives in organizations that are currently ignoring or underutilizing what Big Data can help them to accomplish in terms of profitability, of course, but also sustainable relationships with customers as well as with highly-valued employees.” Morris concluded: “Streaming, Sharing, Stealing is a brilliant achievement. Bravo!”
BIOCRIT
PERIODICALS
Publishers Weekly, July 18, 2016, review of Streaming, Sharing, Stealing: Big Data and the Future of Entertainment, p. 203.
ONLINE
Blogging on Business, http://bobmorris.biz/ ( September 19, 2016 ), Bob Morris, review of Streaming, Sharing, Stealing.
Financial Times Onlne, https://www.ft.com/ (September 11, 2016), Jane Wild, review of Streaming, Sharing, Stealing.
Michael D. Smith/Rahul Telang Home Page, http://www.smithtelang.com (May 3, 2017).
Now Appearing, http://brianclegg.blogspot.com/ (August 16, 2016), review of Streaming, Sharing, Stealing.
Faculty Details
Photo of Michael D. Smith
Michael D. Smith
Professor of Information Technology and Marketing, Heinz College and Tepper School of Business
Email: mds@cmu.edu
Personal Website
Courses
Digital Transformation
Marketing Digital Media
Biography
Michael D. Smith is a Professor of Information Technology and Marketing at Carnegie Mellon University. He received his Bachelors of Science in Electrical Engineering (summa cum laude) and his Masters of Science in Telecommunications Science from the University of Maryland, and received his Ph.D. in Management Science and Information Technology from the Sloan School of Management at MIT.
Professor Smith's research uses economic and statistical techniques to analyze firm and consumer behavior in online markets — specifically markets for digital information and digital media products. His research in this area has been published in leading Management Science, Economics, and Marketing journals and covered by professional journals including The Harvard Business Review and The Sloan Management Review and press outlets including The Economist, The Wall Street Journal, The New York Times, Wired and Business Week.
Professor Smith has received several awards for his teaching and research including the National Science Foundation’s prestigious CAREER Research Award, the 2009 and 2004 Best Teacher Awards in Carnegie Mellon’s Masters of Information Systems Management program, the best published paper award runner-up for Information Systems Research in 2006, and best paper nominations at the International Conference on Information Systems and the Hawaii International Conference on Systems Sciences. He was also recently selected as one of the top 100 “emerging engineering leaders in the United States” by the National Academy of Engineering. Professor Smith currently serves as a Senior Editor at Information Systems Research, and has previously served as an Associate Editor at Management Science and Management Information Systems Quarterly.
Prior to receiving his Ph.D., Professor Smith worked extensively in the telecommunications and information systems industries, first with GTE in their laboratories, telecommunications, and satellite business units and subsequently with Booz Allen and Hamilton as a member of their telecommunications client service team. While with GTE, Professor Smith was awarded a patent for research applying fuzzy logic and artificial intelligence techniques to the design and operation of telecommunications networks
Selected Publications
Liu, Charles, Esther Gal-Or, Chris Kemerer, Michael D. Smith. 2011. Compatibility and Proprietary Standards: The Impact of Conversion Technologies in IT-Markets with Network Effects. Information Systems Research, 22(1) 188-207.
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.
Danaher, Brett, Samita Dhanasobhon, Michael D. Smith, Rahul Telang. 2010. Converting Pirates without Cannibalizing Purchasers: The Impact of Digital Distribution on Physical Sales and Internet Piracy. Marketing Science, 29(6) 1138-1151.
Smith, Michael, Rahul Telang. 2009. Competing with Free: The Impact of Movie Broadcasts on DVD Sales and Internet Piracy. Management Information Systems Quarterly, 33(2) 312-338.
Ghose, Anindya, Michael D. Smith, Rahul Telang. 2006. Internet Exchanges for Used Books: An Empirical Analysis of Product Cannibalization and Welfare Impact. Information Systems Research, 17(1) 3-19.
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.
Asvanund, Atip, Karen Clay, Ramayya Krishnan, Michael D. Smith. 2004. An Empirical Analysis of Network Externalities in Peer-To-Peer Music Sharing Networks. Information Systems Research, 15(2) 155-174.
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.
Brynjolfsson, Erik, Michael Smith. 2000. Frictionless Commerce? A Comparison of Internet and Conventional Retailers. Management Science 46(4) 563-585.
Education
Ph.D., Management Science, Massachusetts Institute of Technology
Working Papers
Converting Pirates without Cannibalizing Purchasers: The Impact of Digital Distribution on Physical Sales and Internet Piracy
With the rise of Napster, BitTorrent, and other tools facilitating Internet piracy, rights holders have understandably become very concerned with the development of strategies to mitigate the impact of piracy on sales. These tools fall into three general categories: litigation, countermeasures, and competition. The literature has addressed the effectiveness of the first two anti-piracy strategies. In this paper we address the third strategy using NBC’s decision to remove its content from Apple’s iTunes store in December 2007 as a natural shock to the legitimate supply of digital content. To address this question we collect two large datasets from Mininova and Amazon.com documenting the levels of piracy and DVD sales for both NBC and other major networks’ content around this event. We then analyze this data in a difference-in-difference model and find that NBC’s decision to remove its content from iTunes is causally associated with a 19.99% increase in the demand for NBC's pirated content. This is roughly equivalent to an increase of 92,612 downloads a day for NBC’s content. Moreover, we see no change in demand for NBC’s DVD content associated with this change.
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All Reviews Are Not Created Equal: The Dissagregate Impact of Reviews and Reviewers at Amazon.com
Online product review networks play an important role in Internet commerce by transmitting information that customers can use to evaluate physical products in a digitally mediated marketplace. These networks frequently include an explicit social component allowing consumers to view both how community members have rated individual product reviews and the social status of individual reviewers. Moreover, the prior literature has not analyzed the impact of these social cues on consumer behavior, focusing instead on the impact of aggregate review ratings. This work extends this prior work by analyzing how these social factors impact consumer responses to disaggregate review information. To do this, a new dataset collected from Amazon.com’s customer reviews of books is used. This dataset allows to control for the degree to which other community members found the review helpful, and the reputation of the reviewer in the community.
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Service Adoption and Pricing of Content Delivery Network (CDN) Services
Content Delivery Networks (CDNs) are a vital component of the Internet’s content delivery value chain, servicing nearly a third of the Internet’s most popular content sites. However, in spite of their strategic importance little is known about the optimal pricing policies or adoption drivers of CDNs. We address these questions using analytic models of the market structure for Internet content delivery. This paper finds that, consistent with industry practices, CDNs should provide volume discounts to content providers when traffic burstiness is similar across content providers. However, when different content providers have varying traffic burstiness, as expected in reality, CDNs should provide relatively lower volume discounts, even leading to convex price functions in some cases. Surprisingly, it is also found that content providers with bursty traffic provision less infrastructure compared to those with lower burstiness, that CDNs are able to charge more in the presence of bursty traffic, and that content providers with bursty traffic realize lower surplus. Similarly, it is found that a pricing policy that accounts for both the mean and variance in traffic such as percentile- based pricing does better than pure volume based pricing. Finally, it is shown that larger CDN networks can charge higher prices in equilibrium, strengthening any technology-based economies of scale.
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Search and Product Differentiation at an Internet Shopbot
Price dispersion among commodity goods is typically attributed to consumer search costs. This paper explores the magnitude of consumer search benefits and costs using a data set obtained from a major Internet shopbot. For the median consumer, the benefits to searching lower screens are $6.55 while the cost of an exhaustive search of the offers is a maximum of $6.45. This paper also estimates price elasticities and find that they are relatively high compared to offline markets, with a decrease in demand of 7 to 10 percent for each percentage increase in price, in the base model. Interestingly, in this setting, consumers who search more intensively are less price sensitive than other consumers, reflecting their increased weight on retailer differentiation in delivery time and reliability. The results demonstrate that even in this nearly-perfect market of the shopbot, substantial price dispersion can exist in equilibrium from consumers preferences over both price and non-price attributes.
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The Impact of Shopbots on Electronic Markets
Internet shopbots are automated tools that allow customers to easily search for prices and product characteristics from online retailers. Some market observers have predicted that shopbots will benefit consumers at the expense of retailers. In this view, shopbots will radically reduce consumer search costs, reduce retailer opportunities to differentiate their products, and as a result will drive retailer margins toward zero. However, a review of the literature suggests that, while shopbots may place pressure on retailer margins in some circumstances, retailers retain numerous opportunities to differentiate their products, leverage brand names, set strategic prices, and reduce the effectiveness of consumer search at shopbots. The paper closes by identifying significant questions for future research.
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The Law of One Price? The Impact of IT-Enabled Markets on Consumer Search and Retailer Pricing
Recent IT research has analyzed how the performance of IT-enabled markets may differ from conventional markets. This literature has made two unexpected empirical findings. First, ITenabled markets for commodity goods exhibit significant price dispersion. Second, well-known retailers in these markets appear to cooperate to set high prices. This paper presents an analytic model, and confirmatory empirical evidence, that explains this behavior as a response to the unique characteristics of consumer search in electronic markets. In conventional markets, consumer search costs are primarily a function of the consumer’s physical proximity to retailer outlets - and physical proximity is distributed relatively equally across retailers. In electronic markets, consumer search costs are primarily a function of the consumer’s mental awareness of different retailers - and this awareness is likely to be concentrated in the hands of a few retailers. Based on this model of consumer search, IT-enabled markets for commodity goods exhibit high price dispersion in equilibrium and a few well-known retailers are able to cooperate to set high prices. The predictions of the model are shown to be consistent with empirical data for 23,744 books collected from 24 Internet retailers in late 1999. Viewing consumer search in this manner provides a useful starting point for understanding the likely development of IT-enabled markets, and for understanding the importance of advertising and first-mover advantage for electronic market participants.
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Consumer Decision-making at an Internet Shopbot: Brand Still Matters
Over the coming century, computer technology is likely to become capable of reproducing many of the skills now performed by human labor. This paper describes three models of the aggregate economic changes that occur when capital becomes capable of performing human work skills. The basic model, with a single sector and homogeneous labor, projects output growth rates over the next few decades that are substantially above historical growth rates in industrialized countries, assuming plausible increases in computer skill. The projected output growth is accompanied by structural changes reflecting the reduced role of labor, with wage growth lagging output growth and the labor share of output decreasing. Resource limits do not substantially affect the levels of output and wage growth in the near future. The 2-type model, with fixed skill differences between different workers, produces similar growth in output and average wages over the next several decades. However, the worker skill differences produce large increases in wage inequality between types of workers. The 2-sector model, with different skill requirements for different economic sectors, also produces similar growth in output and wages over the next several decades. For the three models, asymptotic growth in output and wages is substantially reduced by resource limits, worker skill differences, and sector skill differences, even though those constraints do not substantially reduce growth over the next few decades. The models produce patterns of change in the labor share and capital-output ratio that are consistent with broad trends in economic data.
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Frictionless Commerce? A Comparison of Internet and Conventional Retailers
There have been many claims that the Internet represents a new nearly "frictionless market." Our research empirically analyzes the characteristics of the Internet as a channel for two categories of homogeneous products-books and CDs. Using a data set of over 8,500 price observations collected over a period of 15 months, we compare pricing behavior at 41 Internet and conventional retail outlets. It is found that prices on the Internet are 9-16% lower than prices in conventional outlets, depending on whether taxes, shipping, and shopping costs are included in the price. Additionally, it is found that that Internet retailers’ price adjustments over time are up to 100 times smaller than conventional retailers’ price adjustments-presumably reflecting lower menu costs in Internet channels. Also found that that levels of price dispersion depend importantly on the measures employed. When comparing the prices posted by different Internet retailers, substantial dispersion is found. Internet retailer prices differ by an average of 33% for books and 25% for CDs. However, when these prices are weighed by proxies for market share, it is found that dispersion is lower in Internet channels than in conventional channels, reflecting the dominance of certain heavily branded retailers.
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Understanding Digital Markets:Review and Assessment
As the Internet develops into a robust channel for commerce, it will be important to understand the characteristics of electronic markets. Businesses, consumers, government regulators, and academic researchers face a variety of questions when analyzing these nascent markets. Will electronic markets have less friction than comparable conventional markets? What factors lead to dispersion in Internet prices? What are the major electronic commerce developments to watch in the coming years? This paper addresses these questions by reviewing current academic research, discussing the implications of this research, and proposing areas for future study. The paper reviews evidence that Internet markets are more efficient than conventional markets with respect to price levels, menu costs, and price elasticity. However, several studies find substantial and persistent dispersion in prices on the Internet. This price dispersion may be explained, in part, by heterogeneity in retailer-specific factors such as trust and awareness. In addition, the paper notes that Internet markets are still in an early stage of development and may change dramatically in the coming years with the development of cross-channel sales strategies, infomediaries and shopbots, improved supply chain management, and new information markets.
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Michael D Smith
Professor of Information Technology and Marketing at Carnegie Mellon University's H. John Heinz III College
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Contact Information:
Heinz College
Carnegie Mellon University
4800 Forbes Avenue, HBH 3028
Pittsburgh PA, 15213
Email: mds@cmu.edu
Voice: 412-268-5978
Fax: 412-268-5338
Office: Hamburg Hall 3028
Assistant: Kristen Olinski (HBH 3036 | 412-268-7148)
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Updates:
March-17: I will be giving a talk to open the ACA Summit 2017 session titled, “Bumpy Seas: Leveraging Disruption in the Video Market” and participating on the panel with key players who face the challenges and opportunities of digital viewing and its marketplace.
March-17: Michael Smith was featured in an article by Swedish news publication IDG about the negative effects that piracy, illegal downloads, and file-sharing has on the entertainment industry.
March-17: Michael Smith and Rahul Telang spoke to CBC Radio about how big data is increasing creative opportunities for the entertainment industry
March-17: Michael Smith and Rahul Telang were featured in an article by The Shorthorn about how streaming platforms such as Netflix are significantly changing how entertainment is consumed.
February-17: Brett Danaher, Rahul Telang, and my article was featured in Communications of the ACM. In our article, we conclude that the most effective response to piracy involves combined efforts from both rightsholders and governments.
February-17: Rahul Telang and I discussed digital media distribution from our book, “Streaming, Sharing, Stealing: Big Data and the Future of Entertainment” on a podcast episode with MIT’s Initiative on the Digital Economy.
January-17: I shared the research Seth Stephens, Hal Varian, and I did that movies that are advertised on the Super Bowl experience an increase in U.S. box office sales with Heinz College.
January-17: I spoke to Raw Data about the “perfect storm” of change and shift of power in Hollywood driven by big data with the rise of powerful players such as Netflix and Amazon who use customer data to create content.
January-17: My paper with Seth Stephens and Hal Varian appeared in this month’s Quantitative Marketing and Economics Journal. In the paper we show that movies that are advertised on the Super Bowl experience about an $8.4 million increase in U.S. box office sales from a $3 million Super Bowl advertisement.
January-17: I gave a talk to Gary’s Book Club at the 2017 Consumer Technology Association Conference on technological disruption in the entertainment industries from Rahul Telang and my book, “Streaming, Sharing, Stealing: Big Data and the Future of Entertainment.”
December-16: Rahul Telang and I were featured in an article by CTXT, Context and Action, about big data’s impact on television.
December-16: My paper with Daegon Cho and Alejandro Zentner titled “Internet adoption and survival of print newspapers: A country-level examination” appeared in Information Economics and Policy. Our analysis shows that increased Internet adoption explains a large proportion of the recent decline in print newspaper circulation and the number of newspapers, and that Internet adoption hurts the survival of local newspapers much more than national newspapers.
December-16: Rahul Telang and my book, “Streaming, Sharing, Stealing: Big Data and the Future of Entertainment” was reviewed on the Society for Scholarly Publishing’s Scholarly Kitchen blog.
November-16: Rahul Telang and my book, “Streaming, Sharing, Stealing: Big Data and the Future of Entertainment” will be showcased at Consumer Technology Association’s event, Gary’s Book Club, on January 6, 2017.
November-16: I gave a talk on Rahul Telang and my book, “Streaming, Sharing, Stealing: Big Data and the Future of Entertainment” to Kory French of BTR Today.
November-16: Rahul Telang and my book “Streaming, Sharing, Stealing: Big Data and the Future of Entertainment” was reviewed by Small Business Trends.
November-16: I was featured in an article by The Ringer titled “How to Avoid a Box Office Disaster” on streaming services’ use of algorithms to market content to “exactly the right audience.”
November-16: I gave a talk at TEDxHarvardCollege titled “Is Big Data Killing Creativity?”
November-16: Brett Danaher, Rahul Telang, and I were featured in an article by The Register about our research on the effects of blocking piracy websites in the UK in November 2014 on consumer behavior.
October-16: Rahul Telang and I were featured in an article by Forbes about our research on Netflix’s data-driven business model from our book, “Streaming, Sharing, Stealing: Big Data and the Future of Entertainment.”
October-16: Rahul Telang and my book, “Streaming, Sharing, Stealing: Big Data and the Future of Entertainment” was reviewed by Netopia Forum for the Digital Society.
October-16: Rahul Telang and I spoke to Talks at Google about how big data is changing power in the entertainment industry from our co-authored book, “Streaming, Sharing, Stealing: Big Data and the Future of Entertainment.”
October-16: I will be giving a talk later this month with Rahul Telang at Live Talks Business Forums on our book, “Streaming, Sharing, Stealing: Big Data and the Future of Entertainment.”
September-16: My paper with Miguel Godinho de Matos, Pedro Ferreira, and Rahul Telang titled Culling the Herd: Using Real-World Randomized Experiments to Measure Social Bias with Known Costly Goods appeared in Management Science this month. In the paper, we partner with a major Cable Company to conduct a randomized field trial designed to analyze herding behavior for online movies reviews.
September-16: I was interviewed by Media & Entertainment Services Alliance about my upcoming keynote presentation at the HITS Fall: Digipalooza Conference.
September-16: I was featured in an article by The Wall Street Journal about my study of delaying international DVD releases after the domestic debut reducing foreign sales.
September-16: I was interviewed by Fortune about the book Rahul Telang and I co-authored, “Streaming, Sharing, Stealing: Big Data and the Future of Entertainment.”
September-16: I was featured in an article by Fortune titled “Netflix Could Win Big at the 2016 Emmys” about Netflix’s notable contribution in creating content for entertainment.
September-16: An excerpt from Chapter 11 of Rahul Telang and my book, “Streaming, Sharing, Stealing: Big Data and Future of Entertainment” was featured on the Digital Cinema Report website.
September-16: Rahul Telang and my book, “Streaming, Sharing, Stealing: Big Data and the Future of Entertainment” was reviewed by Copyright and Technology.
September-16: I was interviewed by Yahoo! Finance on how big data is disrupting Hollywood’s entertainment industry.
September-16: I was interviewed by Digital Cinema Report about data challenges Hollywood studios face, and the book Rahul Telang and I co-authored, “Streaming, Sharing, Stealing: Big Data and the Future of the Entertainment.”
September-16: I was interviewed by TheStreet TV’s Gregg Greenberg about big data transforming the entertainment industry from Rahul Telang and my book, “Streaming, Sharing, Stealing: Big Data and the Future of the Entertainment.”
September-16: The Financial Times published a review on the book Rahul Telang and I co-authored, “Streaming, Sharing, Stealing: Big Data and the Future of Entertainment.”
September-16: Rahul Telang and I were interviewed by Breakthrough Radio about data-driven marketing and our co-authored book, “Streaming, Sharing, Stealing: Big Data and the Future of Entertainment.”
September-16: I was interviewed on WNYC’s The Leonard Lopate Show about the book Rahul Telang and I co-authored, “Streaming, Sharing, Stealing: Big Data and the Future of Entertainment.”
September-16: I was interviewed by Business News Network about big data and how it is reshaping the entertainment industry.
September-16: I was interviewed by Nasdaq Reads on Facebook Live about the book Rahul Telang and I co-authored, “Streaming, Sharing, Stealing: Big Data and the Future of Entertainment.”
September-16: I discussed the book Rahul Telang and I co-authored, “Streaming, Sharing, Stealing: Big Data and the Future of Entertainment” on The Bloomberg Advantage.
September-16: Rahul Telang and my book, “Streaming, Sharing, Stealing: Big Data and the Future of Entertainment” was featured in an article titled “If You Want to Run an Entertainment Company, Here is Your New Bible” on the Cultural Weekly website.
September-16: Rahul Telang and I contributed to a piece by the Chicago Tribune titled “Should you share your Hulu, Amazon Prime passwords?”.
August-16: Rahul Telang and I were interviewed by The Digital Show about how big data is changing the entertainment industry.
August-16: Rahul Telang and I wrote a column for Publisher’s Weekly about how major publishers can use big data and bundling strategies to take control of the future of their industry.
August-16: Rahul Telang and I co-authored an article for the website 52 Insights titled “Why The Entertainment Industry Is Now Competing For Your Attention.”
August-16: Rahul Telang and I co-authored an article titled “Hollywood’s Moneyball Moment” which appeared in this month’s “ChangeThis Manifesto.”
August-16: I was interviewed on NPR Marketplace Tech about my upcoming book with Rahul Telang, “Streaming, Sharing, Stealing: Big Data and the Future of Entertainment.”
July-16: I was interviewed by NPR Marketplace about the effectiveness of anti-piracy strategies.
June-16: I gave a presentation to Sony Pictures Entertainment titled “Big Data and the Future of Entertainment.”
June-16: I gave a presentation at Salesforce headquarters titled “The Netflix Effect: How Technology is Changing the Business of Entertainment.”
June 16: I gave a presentation at LinkedIn headquarters discussing my new book with Rahul Telang: “Streaming, Sharing, Stealing: Big Data and the Future of Entertainment.”
June-16: Brett Danaher, Rahul Telang, and I authored a blog post for the Technology Policy Institute discussing our research into two broadcast strategies for encouraging consumers to switch from pirated content to legal content.
May-16: Rahul Telang and I have a new research paper analyzing the impact of delayed international windows on DVD sales.
May-16: Brett Danaher, Rahul Telang, and I had research studying whether UK blocking was effective in driving the adoption of legal channels covered by The Australian Business Review.
May 16: Brett Danaher, Rahul Telang, and I had research analyzing the impact of site blocking policies in the UK featured in an article by Forbes.
May-16: I gave a talk on website blocking research at Harvard Business School’s Digital Initiative Discussion & Symposium.
April-16: Rahul Telang and I authored an entry titled “Piracy Myths Debunked” that was featured on the CreativeFuture blog.
April-16: I gave a keynote presentation titled “Customer Data and the Future of Entertainment” at the 2016 Cable Academy conference.
April-16: Alan Montgomery, Liye Ma, and I had research mentioned by Gale Anne Hurd, Producer of The Walking Dead in an editorial on USA Today.
BIO/VITA
Professional Biography:
Michael D. Smith is a Professor of Information Systems and Marketing and the Co-Director of IDEA, the Initiative for Digital Entertainment Analytics at Carnegie Mellon University’s Heinz College. He received a Bachelors of Science in Electrical Engineering (summa cum laude) and a Masters of Science in Telecommunications Science from the University of Maryland, and received a Ph.D. in Management Science from the Sloan School of Management at MIT.
Professor Smith’s research uses economic and statistical techniques to analyze firm and consumer behavior in online markets — specifically markets for digital information and digital media products. His research in this area has been published in leading Management Science, Economics, and Marketing journals and in leading professional journals including The Harvard Business Review and The Sloan Management Review. His research has also been covered by press outlets including The Economist, The Wall Street Journal, The New York Times, Wired and Business Week.
Professor Smith has received several awards for his teaching and research including the National Science Foundation’s prestigious CAREER Research Award, the 2009 and 2004 Best Teacher Awards in Carnegie Mellon’s Masters of Information Systems Management program, the best published paper award runner-up for Information Systems Research in 2006, and best paper nominations at the International Conference on Information Systems and the Hawaii International Conference on Systems Sciences. He was also recently selected as one of the top 100 “emerging engineering leaders in the United States” by the National Academy of Engineering. Professor Smith has served on the editorial boards of a variety of top journals including as a Senior Editor at Information Systems Research and as an Associate Editor at Management Science and Management Information Systems Quarterly.
Prior to receiving his Ph.D., Professor Smith worked extensively in the telecommunications and information systems industries, first with GTE in their laboratories, telecommunications, and satellite business units and subsequently with Booz Allen and Hamilton as a member of their telecommunications client service team. While with GTE, Professor Smith was awarded a patent for research applying fuzzy logic and artificial intelligence techniques to the design and operation of telecommunications networks.
A full curriculum vita is available here.
Selected Grants and Awards:
Adjunct Senior Fellow, Technology Policy Institute, 2013-Present.
Google Research Award for “Promoting Movies in Digital Channels: Impact of Targeted Movie Promotion on Sales and Piracy in Digital Movie Markets” (with Rahul Telang), February 2014.
Initiative for Digital Entertainment Analytics at Carnegie Mellon University (IDEA@cmu), unrestricted gift from the Motion Picture Association of America to analyze the impact of digitization on the motion picture industry, October 2012.
Google Research Award for “Broken Windows? The Future of International Distribution Windows in a Global Media Market” (with Rahul Telang), June 2011.
Google Research Award for “Estimating The Welfare Gain From Digitization of ‘Out-Of-Print’ Books” (with Rahul Telang), May 2011.
International Intellectual Property Institute and United States Patent and Trademark Office for “Statistical Analysis of the Impact of Camcording Piracy” (with Rahul Telang), April 2011.
Marketing Science Institute and Wharton Interactive Media Initiative Research Award for “Modeling Multichannel Customer Behavior,” (with Anuj Kumar and Rahul Telang), June 2010.
Google WPP Marketing Research Award for “Channels and Conflict: Efficient Marketing Strategies for Digital Distribution Channels,” (with Rahul Telang), February 2010.
Yahoo! Faculty Research and Engagement Gift for “Advertising Strategies for Social Networks,” (with Nachi Sahoo), November 2009.
Center for the Analysis of Property Rights and Innovation (CAPRI) Research Grant for “The Impact of Digital Music Distribution on Physical Sales and Internet Piracy,” (with Brett Danaher and Rahul Telang), March 2009.
Motion Pictures Laboratory Research Grant, “Analysis of Piracy in Online Secondary Markets,” (with Rahul Telang), 2007.
NET Institute Summer Research Grant, “Standards Competition in the Presence of Conversion Technology: An Empirical Analysis of the Flash Memory Market,” (with Charles Liu and Chris Kemerer), 2007.
Best Published Paper Award Runer-Up, Information Systems Research, 2007, “Internet Exchanges for Used Books: An Empirical Analysis of Product Cannibalization and Welfare Impact,” with Anindya Ghose, and Rahul Telang.
Center for the Analysis of Property Rights and Innovation (CAPRI) Research Grant for “Competing with Free: The Impact of Movie Broadcasts on DVD Sales and Internet Piracy,” (with Rahul Telang), October 2006.
NSF CAREER Award, “Designing Efficient Information Exchanges: A Program for Research and Teaching, IIS-04485216, 2005-2010.
MISM Teaching Excellence Award Nomination, 2005.
NET Institute Summer Research Grant, “Incentives and Protocols for Self-Organizing Interest-Based Peer-to-Peer Networks,” (with Rahul Telang), 2004.
MISM Teaching Excellence Award Winner, 2004.
Best Paper Award Nomination, 2004 International Conference on Information Systems (ICIS).
Best Paper Award Runner-Up, 2004 Hawaii International Conference on System Sciences (HICSS).
Amazon.com Research Grant, 2003.
Marketing Science Institute Research Award, “The Profitability of Shopbot Design,” #4-1191 (with Alan Montgomery), 2002.
Best Paper Award Runner-Up, 2002 International Conference on Information Systems (ICIS).
National Society of Collegiate Scholars, Outstanding Faculty Award, 2002.
Carnegie Bosch Institute Faculty Development Grant, 2001.
Berkman Faculty Development Award, 2000.
Selected Service Activities:
Senior Editor, Information Systems Research, 2009-2012.
Associate Editor, MIS Quarterly, 2008-2010.
Associate Editor, Management Science, 2004-2008.
Associate Editor, Information Systems Research, 2003-2006.
Associate Editor, Decision Support Systems and Electronic Commerce, 2003-Present.
Co-Chair, Workshop on Information Systems and Economics, 2006.
Program Committee, Workshop on the Economics of Peer-to-Peer Systems, Berkeley, CA, June 2003.
Michael D. Smith is a Professor of Information Systems and Marketing and the Co-Director of IDEA, the Initiative for Digital Entertainment Analytics at Carnegie Mellon University’s Heinz College. He received a Bachelors of Science in Electrical Engineering (summa cum laude) and a Masters of Science in Telecommunications Science from the University of Maryland, and received a Ph.D. in Management Science from the Sloan School of Management at MIT.
Professor Smith’s research uses economic and statistical techniques to analyze firm and consumer behavior in online markets — specifically markets for digital information and digital media products. His research in this area has been published in leading Management Science, Economics, and Marketing journals and in leading professional journals including The Harvard Business Review and The Sloan Management Review. His research has also been covered by press outlets including The Economist, The Wall Street Journal, The New York Times, Wired and Business Week.
Professor Smith has received several awards for his teaching and research including the National Science Foundation’s prestigious CAREER Research Award, the 2009 and 2004 Best Teacher Awards in Carnegie Mellon’s Masters of Information Systems Management program, the best published paper award runner-up for Information Systems Research in 2006, and best paper nominations at the International Conference on Information Systems and the Hawaii International Conference on Systems Sciences. He was also recently selected as one of the top 100 “emerging engineering leaders in the United States” by the National Academy of Engineering. Professor Smith has served on the editorial boards of a variety of top journals including as a Senior Editor at Information Systems Research and as an Associate Editor at Management Science and Management Information Systems Quarterly.
Prior to receiving his Ph.D., Professor Smith worked extensively in the telecommunications and information systems industries, first with GTE in their laboratories, telecommunications, and satellite business units and subsequently with Booz Allen and Hamilton as a member of their telecommunications client service team. While with GTE, Professor Smith was awarded a patent for research applying fuzzy logic and artificial intelligence techniques to the design and operation of telecommunications networks.
Streaming, Sharing, Stealing: Big Data and the Future of Entertainment
263.29 (July 18, 2016): p203.
Copyright: COPYRIGHT 2016 PWxyz, LLC
http://www.publishersweekly.com/
Streaming, Sharing, Stealing: Big Data and the Future of Entertainment
Michael D. Smith and Rahul Telang. MIT, $29.95 (232p) ISBN 978-0-262-03479-1
Smith and Telang examine the market structures and competitive strengths and weaknesses of traditional book publishers, recording labels, and movie studios in light of challenges from industry disrupters. They argue that "a converging set of technological and economic changes" are "threatening to shift the foundations of power and profit in these important industries." The fact that the threat has already manifested gives the book a feeling of old news, and the authors' prescription--that traditional megacorporations should run their businesses more like Amazon, iTunes, and Netflix--is likely to be viewed as distasteful medicine by a patient who's not convinced he's ill. Examples and case studies include sheet music, rock 'n' roll, Netflix's House of Cards, e-books, Microsoft's Encarta encyclopedia, Hulu, and the 2004 standoff between Amazon and Melville House. While illustrative, these and other examples mostly feature technology companies' wins at the expense of traditional companies. The book's example of a success story among traditional companies--casino giant Harrah's Entertainment--comes from outside the creative industries. Readers would be better served by a more balanced and updated view of traditional industries' problems and possible solutions to them. (Sept.)
Source Citation (MLA 8th Edition)
"Streaming, Sharing, Stealing: Big Data and the Future of Entertainment." Publishers Weekly, 18 July 2016, p. 203. General OneFile, go.galegroup.com/ps/i.do?p=ITOF&sw=w&u=schlager&v=2.1&id=GALE%7CA459287577&it=r&asid=0ba112112cbed5b955a3cdb320e6cd71. Accessed 28 Mar. 2017.
Gale Document Number: GALE|A459287577
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Review: ‘Streaming, Sharing, Stealing’, by Michael D. Smith and Rahul Telang
TV and film networks need to move away from ‘gut instincts’ to use data
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Data day: authors Michael Smith and Rahul Telang show how the success of 'House of Cards', starring Kevin Spacey, upended the film and TV industries © Bloomberg
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September 11, 2016
by: Jane Wild
When the makers of the US version of House of Cards were pitching their series to television networks they were sure they had all the makings of a hit. The only problem was that none of the networks they approached wanted to take the risk of funding a pilot, let alone the series, because according to conventional wisdom in the industry, political dramas were not successful.
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But streaming service Netflix analysed data on its 33m subscribers to discover that many were fans of lead actor Kevin Spacey, director David Fincher and had rented the original BBC series. Those data were proof enough for Netflix to dispense with a pilot and instead offer $100m upfront for two series — a decision greeted with scepticism in the industry, but which turned out to be inspired. The programme has proved incredibly popular with audiences and critics alike and its fifth series is due for release next year.
The story demonstrates the role that data now play in entertainment industry decision making — Netflix was even able to produce several trailers targeted at its various audience categories.
It shows how the balance of power is shifting away from film, TV and music businesses, traditionally the biggest and most powerful, towards such entities as Netflix and Amazon — those that distribute content.
Streaming, Sharing, Stealing charts the history of film, TV and music industries, going back a century to show how developments in technology and changing consumer habits have created a period of unprecedented change for them.
The book, by two professors at Carnegie Mellon University, offers many lessons for executives in the creative industries, as well as serving as a case study of the challenges faced by any industry grappling with disruptive forces.
It is packed with examples, from the nimble-footed who reacted quickly to adapt their businesses, to laggards who lost empires.
Consider Apple, which was struggling when Steve Jobs rejoined in 1997 and became its chief executive. Jobs pinpointed the failure: Apple relied upon third parties to sell its computers and staff in those shops were often happier to recommend the cheaper products of competitors. He hunted out market and demographic data to show where Apple could build its own shops in the most convenient locations and sell directly to its customers — a strategy that went against the grain at the time.
The book also offers insights for artists, film-makers and writers, pointing to how they can maximise what they earn and provide incentives that discourage piracy. The band Radiohead decided to bypass traditional music publishers when releasing their 2007 album In Rainbows. They made the tracks available to fans directly through their website, for any price they wished to pay, including nothing at all. It was the band’s most profitable album at the time.
Those that failed to recognise the changing climate include NBCUniversal, which took a gamble in 2007 to remove its TV shows from Apple’s iTunes player. However, viewers largely opted for piracy rather than following NBC to other digital outlets.
In one sense, Streaming, Sharing, Stealing highlights what the seasoned marketer has always known: the immense value of knowing your customer. Yet this study of the triumph of data is still much needed, as evidenced by the many executives who refuse to believe that the age of “gut instinct” and the “taste maker” has passed.
The upshot for businesses is clear: change is happening and the way to ensure your business survives is to be ready to adapt and take bold decisions — just as Netflix did with its $100m bet on a series the industry said would never work.
Streaming, Sharing, Stealing: Big Data and the Future of Entertainment, by Michael D. Smith and Rahul Telang, MIT, 232 pages
Streaming, Sharing, Stealing review
Because it's from a university press, I must admit I expected Streaming, Sharing, Stealing to be a somewhat dull economic textbook - but in reality it is a great read and a cracking business book, giving the clearest explanation I've ever seen of what is happening to three arms of the entertainment business - book publishing, music and TV/film - in the face of the internet/digital revolution.
In that sense the title is misleading, as it seems to suggest that a major focus is music sharing and piracy. This is certainly is covered, but is dismissed as the relatively easy part. Like most of the analysis in the book, here Michael D. Smith and Rahul Telang make sure that their views are backed up with as much experimental data as possible - and there appears to be good evidence that piracy isn't too big a deal, provided it's made easy to get access to legal digital versions in a timely fashion. It's where the publishers/networks either have poor online access or delay it til after, say, a DVD or hardback comes out that problems arise.
However, the main issue that Smith and Telang cover is the challenge that book and music publishers and the film studios/TV networks face in dealing with the internet giants. As the authors point out, the entertainment industries coped fine with new technology throughout the 20th century because they had control of the source material and distribution, and so were complacent when faced with the internet. But here, several major changes came together - Smith and Telang draw a parallel with the 'perfect storm' - and the old big names are potentially in trouble. The authors show how Amazon, iTunes and Netflix (as key examples) mean real trouble for those who used to pull the strings, particularly because of the newcomers' access to customer data, and ability to give customers what they are looking for, rather than just put out what they think customers might want and hope.
The analysis is often brutal and displays some outcomes from experiment that might surprise the publishers. For example, they found that when ebooks or digital versions of TV and film came out at the same time as DVDs and hardbacks, the overall take went up, but if they were held back to let more expensive DVDs and hardbacks have first shot - which was the traditional model used by most publishers and studios - digital sales plummeted, because digital users didn't buy the hardback/DVD instead, but either got a pirate version or just went for something else.
As well as individual lessons like this, the book does offer a little hope for the beleaguered publishers and studios as long as they can change their mindset - but it also seems likely that they will be like Kodak in the photography business, leaving it too late. As the authors make clear, it's not enough for individual publishers or studios to have their own online store, because few customers actually know or care who their favourite author/band is published by, or which network or studio produced what they want to watch. The only hope is if the content providers can band together and have a joint digital location with timely releases. But this doesn't augur well, as the the one attempt the networks have made, Hulu, has been shackled, forcing advertising and late releases on it.
If you are interested in the media and how the digital age is threatening the old world and transforming our entertainment environment, you need to read this book.
Streaming, Sharing, Stealing is available from amazon.co.uk and amazon.com.
Streaming, Sharing, Stealing: A book review by Bob Morris
Posted on: September 19th, 2016 by bobmorris
streamingStreaming, Sharing, Stealing: Big Data and the Future of Entertainment
Michael D. Smith and Rahul Telang
The MIT Press (August 2016)
An insightful discussion of the evolving nature and probable impact of Big Data
Decisions that concern Big Data do not involve IT issues; rather, they involve business issues and usually have implications and consequences that can have significant impact throughout the given enterprise. That is especially true of decisions made within the entertainment industry. Keep that thought in mind when working your way through the material provided by Michael Smith and Rahul Telang, especially when they are discussing companies that include (listed in alpha order) ABC, Apple, Amazon, Blockbusters, CBS, Encyclopedia Britannica, Funk & Wagnulls, Google, Harrah’s Entertainment, and Netflix.
Smith and Telang have much of value to say about how and why data analytics and Big Data have transformed the entertainment industry and leveled that playing field. “The interactive nature of online channels has changed everything. Companies like Amazon, Google, and Netflix don’t think about their customers in terms of broad demographic characteristics. They are able too use their data and their platforms to understand individual customer preferences. This, combined with the ability to control what content is shown customers based on those preferences, and the natural ‘winner take all’ nature of many online markets have given these new platform firms a great deal of market power.”
Moreover, “they have used this power to change the content is consumer by the audience, and change the business model for content distribution. This puts the platform companies =in an even more powerful position as con summers adopt and adapt to these new distribution models.” These brief comments by Smith and Telang help to explain why competition in today’s global marketplace has become more volatile, more uncertain, more complex, and more ambiguous than at any prior time that I can remember.
These are among the several dozen passages of greatest interest and value to me, also listed to suggest the scope of Smith and Telang’s coverage:
o House of Cards (Pages 3-10)
o BitTorrent (9-11 and 119-122)
o Beau Willimon (14-18)
o Recording industry (23-28)
o Book issues (31-34, 35-38, and 37-40)
o Differentiation of products (42-44 and 93-95)
o Encyclopedias on computers (51-58)
o Internet issues (64-70 and 128-131)
o Piracy (82-92)
o CBS (120-121)
o Peter Shutoff 106-108)
o Apple vs. NBC (117-121)
o Dominance of Apple (122-124)
o Baseball: Michael Lewis and Moneyball (133-0138)
o Google (141-145)
o Customer-level data (143-145 and 160-163)
o Netflix: Data-based decision making (145-150)
o Harrah’s Entertainment (155-163)
o Gary Loveman (157-163)
o Steve Jobs (175-177)
o Apple retail stores (176-178)
In Winner Takes All, Christina Brinkley explains how Steve Wynn, Kirk Kerkorian, and Gary Loveman used Big Data to achieve a competitive advantage for their casinos in Las Vegas. Smith and Tulane cover some of this in their book. Here are the key points:
o Obtaining the data needed requires a new reporting structure that threatens the status quo and its defenders.
o Information-technology systems are needed to process and evaluate data to determine customer preferences.
o The team must include members with strong quantitative backgrounds.
Loveman and his team at Harrah’s Entertainment found that 26 percent of its customers generated 82 percent of its revenue. Also, their most profitable customers were middle-aged adults and senior citizens who enjoyed playing slot machines. They were also able to predict the lifetime value of a new customer. These are revelations of incalculable value. There are similar stories in other organizations, several also included in the book.
These are among Michael Smith and Rahul Terlang’s concluding thoughts: “The overarching lesson for the entertainment industries is that, to succeed in the future, companies are going to have to control the interface with their customers (and the resulting data about their customers’ needs) in addition to controlling the production of content. That’s what we have been arguing throughout this book.” Entertainment industries include but are by no means limited to gaming. This is a “must read” for C-level executives in organizations that are currently ignoring or underutilizing what Big Data can help them to accomplish in terms of profitability, of course, but also sustainable relationships with customers as well as with highly-valued employees.
Streaming, Sharing, Stealing is a brilliant achievement. Bravo!