Economics of Oprah's Book Club

Like any post on Oprah, this one is for my wife:

It is well known that celebrity endorsement can have a very significant impact on the sale of products, and nowhere is this more true than with the Oprah Winfrey book club. If Oprah endorses a book, not only club members buy it en masse, but also non-members who see the endorsement on television or in the New York Times. But the spill-over does not stop here.

Indeed, Eyal Carmi, Gal Oestreicher-Singer and Arun Sundararajan show that when potential buyers go to Amazon.com to make their purchase of their endorsed book, they are presented with recommendations, which they may also buy, and then get further recommendations. It turns out that these recommendations are followed quite a bit, which generates something like a network contagion effect. The authors find that over several days after the endorsement, such a contagion effect can be significant through five levels. I would have expected this to happen when an academic click through a literature by looking at a paper's references and citations, but I would not have expected this to be so important for laypeople purchasing books, especially within days.

That's from Economic Logic.