Copyright, Digitization, and Aggregation

The digital revolution means that consumers can now quickly and easily access content that is aggregated from many online sources. However, digital aggregation has tested the boundaries of copyright law. It is not clear whether allowing extracts of copyrighted works to be distributed by others benefits or harms copyright holders. We ask whether digital aggregation encourages users to “skim” or to investigate content in depth. We exploit a contract dispute that led a major aggregator to remove information from a content provider. We find that after the removal, users were less likely to investigate additional content in depth. The relaxation of copyright protection benefited horizontally or vertically differentiated content the most. JEL classification: L86 keywords: digitization, information, consumer search, Internet ∗Economics Department, Occidental College, CA †MIT Sloan School of Management, MIT, Cambridge, MA and National Bureau of Economic Research. ‡An earlier version of this paper was circulated under the title “News and Online Aggregators.” We thank Robert Seamans useful comments. We thank Christopher Hafer of Experian Hitwise. We also thank Sara Mcknight for excellent research assistance. Financial support from the NBER Innovation Policy Group and NET Institute (www.NETinst.org) is gratefully acknowledged.