The Case for Giving Away Creative Content

SMITH BRAIN TRUST — BroadwayHD made history on June 30, 2016, with livesteaming of "She Loves Me," a musical production at Studio 54 in New York. Other companies have done similar things for years. The Kenneth Branagh Theatre Company in London, for example, will telecast a live production of "Romeo and Juliet" tonight — but audiences must travel to select movie theaters around the world to participate. BroadwayHD went one step further. Subscribers could sit at home in their pajamas and watch Laura Benanti perform in her pajamas on the Internet, Roku and Apple TV.

Some industry insiders worry that delivering affordable content online might shrink ticket sales on Broadway or hurt the brand. But new research co-authored by P.K. Kannan, the Ralph J. Tyser Professor of Marketing Science at the University of Maryland's Robert H. Smith School of Business, shows that the opposite often happens when consumers get exposed to creative content in new formats.

"If the attributes of the two formats are sufficiently different — which makes the consumption experience different — then the two formats become more like complements," Kannan says. "They don’t become substitutes." Owning music on your smartphone, for example, is not the same as going to a concert. The two experiences complement each other. Doing one thing raises awareness and increases your desire for the other. But reading a news article online is about the same as reading it in print. One activity substitutes for the other, which kills newspaper subscriptions.

The study, under review at the Journal of Marketing Research, looks specifically at what happens when a publisher offers free PDF versions of books for sale. The research shows that a PDF often makes a sufficient substitute for text-heavy books with low production quality (boring cover, black-and-white images, dull paper). But a PDF tends to boost sales of more elaborate, colorful, highly produced books.

Kannan says the complementary effect is strongest when the free or discounted sample reflects the quality of the original. After all, it's hard to grow an elite brand by distributing inferior samples. Imagine what would happen if the NFL intentionally produced grainy telecasts as a way to protect the in-person stadium experience. "If you want to create demand for a high-quality product, your sample should also be high quality," Kannan says.

He says BroadwayHD took the right approach by setting up nine or 10 cameras in Studio 54 and testing angles, lighting and sound to ensure a Broadway-worthy experience for viewers at home. Subscribers paid $9.99 to access the live feed, but Kannan says the company will come out ahead even if live streaming loses money. "They are building interest in musical theater and expanding the market," he says.

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"Optimal Design of Content Samples for Digital Products and Services" (working draft) is under review at the Journal of Marketing Research. Authors include Hongshuang (Alice) Li at Indiana University, Sanjay Jain at Texas A&M University, and P.K. Kannan at the University of Maryland.