Storming the Gatekeepers: Digital Disintermediation in the Market for Books

The NBER hosts an annual conference by the heading of The Economics of Digitization that’s really neat and relevant for book lovers, publishers, and librarians alike (but are usually only attended by economists since it’s an by-invitation only event). I was at this conference last year and blogged about it here. I won’t be able to attend this year but was alerted by a friend of a paper that you guys may find interesting.

Joel Waldfogel and Imke Reimers are presenting a paper called “Storming the Gatekeepers: Digital Disintermediation in the Market for Books” whose abstract is as follows

. . . digitization has given creators the ability to circumvent traditional gatekeepers and publish their work directly. The number of self-published works has grown by almost 300 percent since 2006 and now exceeds the number of traditionally published works. Given the inherent difficulty in predicting the ex post appeal of creative products at the time of investment, a growth in available new products can substantially expand the appeal of available products. While e-book data are not systematically available, we are able to document that falling prices have increased consumer surplus by $2-3 billion per year. Using bestseller lists in conjunction with title-level data on physical sales and our best estimates of e-book sales, we document that many self-published books have substantial ex post appeal to consumers. Works that began their commercial lives through self-publishing began to appear on bestseller lists in 2011 and by late 2012 such works accounted for a tenth of both bestseller listings and estimated unit sales. In romantic fiction, self-published works account for almost a third. These changes challenge the role of gatekeepers while benefiting consumers.

I think for librarians working at academic libraries, the disintermediation produced by self-publication is less of a concern than it may be for others in the book trade. These academic librarians don’t collect romantic fiction and the kind of scholarly works they do collect are very unlikely to be self-published. Publishers in the academic-scholarly world still play the role of gatekeepers, and the name of a university press is still a very viable signal of the quality of the book at hand.

This is not to say that academic librarians do not face disintermediation as a result of digitization. Rather, the source of disintermediation here is due not to self-publishing but to shrinking library budgets and the speed and convenience of e-delivery. These twin factors have led librarians to abandon the “just in case” mode of collection development and instead look to “just in time” patron-driven acquisitions. PDAs are really one of my favorite things in a library (but you guys probably already know that thanks to how much I’ve blabbed on the topic before). Disintermediation really does benefit library patrons in this case; as for the intermediaries (one of whom I hope to be), I’m not worried. Librarians will find something to do!

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