Selected Publications
THE COST OF FREE: THE EFFECTS OF “WAIT-FOR-FREE” PRICING SCHEMES ON THE MONETIZATION OF SERIALIZED DIGITAL CONTENT
( Choi, Angela Aerry | Rhee, Ki-Eun | Yoon, Chamna | Oh, Wonseok )MIS QUARTERLY2023-09
Abstract
Leveraging a combination of analytical frameworks and empirical assessments, this study investigates the effects of wait-for-free (WFF) pricing schemes on the monetization of serialized, digital entertainment content, which has become increasingly pervasive on online platforms. WFF pricing is a strategy in which consumers are given the option to either wait a certain amount of time to acquire digital content at no cost or pay to consume it immediately. We evaluate the extent to which habit formation and present-biased preferences driven by the consumption of addictive stock affect individual consumers’ willingness to wait (or pay) for content, which, in turn, determines the efficacy of WFF pricing. We also examine the conditions under which consumers switch from waiting for free content to instantaneously purchasing content. Our findings indicate that WFF pricing increases the sales of serialized digital content, generating new demand from customers who would otherwise forgo participation in the market. In addition, the pricing design effectively generates sustained profits in the long run. We found that most consumers who initiate a purchase either upon initial market entry or upon switching continue to purchase as new episodes become available. Moreover, the results indicate that as a user accumulates free episodes of a specific series, given extended waiting periods, the likelihood of their conversion from a wait-for-free customer to an instant-purchase customer increases. In particular, WFF pricing effectively augments the willingness to pay of low-valuation consumers as habit formation builds up through time with the free consumption of serialized content. One free episode can elevate the likelihood of consumer purchase by up to 13%. However, as the number of free episodes consumed goes beyond a threshold, the likelihood of conversion decreases. We conclude with a discussion of managerial implications that can help content providers monetize their serialized digital content products.
Positive Demand Spillover of Popular App Adoption: Implications for Platform Owners' Management of Complements
( Lee, Mi Hyun | Han, Sang Pil | Park, Sungho | Oh, Wonseok )INFORMATION SYSTEMS RESEARCH2023-09
Abstract
As platform owners interact with end users and complementors, their demand side characteristics and performance affect the overall value creation of ecosystems. This research investigated how the emergence of popular complements on a mobile communication platform impacts the usage of other complementary products by the platform's end users and how platform owners can benefit from such demand spillovers. We identified two different forms of demand spillovers (i.e., backward and forward) and conceptualized how each subsequently affects platform expansion. On the basis of individual user-level app usage data, we empirically demonstrated how the presence of a popular app alters the demand structure of a platform through changes in the usage of other apps operating within it. The findings reveal that popular app adoption by users increases the number of apps used and the duration of app usage, excluding the usage of popular apps, only within the platform offering a popular app. These results support the existence of positive spillovers from popular complement adoption on a platform. Such positive within-platform spillovers are derived from both backward spillovers onto existing apps adopted before popular app adoption and forward spillovers onto new apps to be adopted after the uptake of favored apps. These patterns suggest that positive spillovers of popular app adoption occur through both the increased retrieval of existing apps and reduced uncertainty about newly released apps. Furthermore, forward spillover is considerably stronger than backward spillover, implying that platform owners can reap benefits by coordinating the launch of new complements and the promotion of less-known counterparts to end users with the emergence of a popular app. These results shed light on how platform owners can manage their complements and create value beyond direct contributions from popular complements.
Multidimensional Targeting and Consumer Response
( DESPOTAKIS, Stylianos | YU, Jungju )MANAGEMENT SCIENCE2023-08
Abstract
Advancements in targeting technology have allowed firms to engage in more precise targeting based on several aspects of consumers' preferences. Exposed to more targeted ads, consumers are becoming increasingly aware of being targeted and respond accordingly. This paper provides a theoretical analysis of multidimensional targeting under which consumers can draw inferences about multiple components of their utility from the advertised product. We show that the firm can be worse off under multidimensional targeting than under single-dimensional targeting, in which the firm targets consumers based only on a single component of their utility. This is because, with multidimensional targeting, targeted consumers may face greater uncertainty about which specific dimension(s) they can expect to enjoy the advertised product. Therefore, they may be less willing to exert a costly effort of clicking the ad and purchasing the product. When this result holds, the firm may want to adopt a single-dimensional targeting strategy. However, we show that the firm cannot credibly commit to such a strategy once given access to multiple dimensions of customer data. Interestingly, a higher unit cost of advertising can mitigate the firm's commitment problem for utilizing customer data and, thus, increase the firm's profit. Moreover, the firm can sometimes lower the price to recover some of, but not entirely offset, the drawbacks of multidimensional targeting. We discuss the implications of our results regarding the current practice of targeted advertising and data privacy protection policies.
Learning Outside the Classroom During a Pandemic: Evidence from an Artificial Intelligence-Based Education App
( Ko, Ga Young | Shin, Donghyuk | Auh, Seigyoung | Lee, Yeonjung | Han, Sang Pil )Management Science2023-06
Abstract
Drawing on the notion of compensatory behavior, this paper studies how students compensate for learning loss during a pandemic and what role artificial intelligence (AI) plays in this regard. We further probe into a difference in compensatory behavior for learning loss in terms of quantity, pattern, and pace (i.e., tripartite aspect of learning behavior) of AI-powered learning app usage depending on the level of pandemic threat and the proximity of a goal to students. Results show that the pandemic threat affects student learning behavior differently. Immediately following the COVID-19 outbreak, students who live in the epicenter of the outbreak (versus those who do not) use the app less at first, but with time, they use it more (quantity), on a more regular basis (pattern), and rebound to a curriculum path (pace) comparable to students who do not live in the outbreak's epicenter. These findings collectively explain behavior that is consistent with compensation for learning loss. The results also partially corroborate the goal-proximity effect, revealing that proximity to a goal (e.g., the degree to which the national university admission exam is approaching) has a moderating role in explaining the tripartite perspective of student learning behavior. Overall, these findings have important theoretical and practical implications for understanding how innovative education technologies can not only facilitate student learning during adversity, but also support learning recovery after adversity.
The Voice of Commerce: How Smart Speakers Reshape Digital Content Consumption and Preference
( Son, Yoonseock | Oh, Wonseok | Im, Il )MIS QUARTERLY2023-06
Abstract
The present study investigates the effects of smart speaker usage on consumers’ digital content search, purchase, and consumption behaviors. Using a unique panel data set comprising information on household patterns of digital content (e.g., video on demand [VOD]) transactions and consumption and smart speaker usage, we found that the adoption of smart speakers is positively associated with the increased purchase of digital content but negatively related to the average rate of content completion. More specifically, we found that VOD content-related expenditures increased by 21.5% following smart speaker adoption but the average consumption of VOD content purchased decreased by 3.0%. We also examined millions of data points on TV remote-control use and conducted a survey via MTurk to support the validity of the findings. Smart speaker usage can reduce search costs, which subsequently increases search incidence and conversion rates, behavioral changes that can lead to a rise in purchases. We further show that the use of smart speakers for purposes other than information seeking is positively associated with purchases. We develop insights on how to elicit economic value from voice recognition technologies and provide implications for the design and implementation of effective voice commerce strategies.
