The Effect of Word of Mouth on Sales: Online Book Reviews Author(s): Judith A.

Chevalier and Dina Mayzlin Reviewed work(s): Source: Journal of Marketing Research, Vol. 43, No. 3 (Aug., 2006), pp. 345-354 Published by: American Marketing Association Stable URL: http://www.jstor.org/stable/30162409 . Accessed: 03/02/2013 08:07
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JUDITH A. CHEVALIER and DINA MAYZLIN*

sales reviews relative on of the examine effect consumer The authors find The and ofbooksat Amazon.com Barnesandnoble.com. authors that are at are sites,butthere more positive both (1) reviews overwhelmingly in at and longerreviews Amazon.com; an improvement a reviews (2) sales at thatsite;(3) for leads to an increasein relative book'sreviews than reviews greater is of the mostsamplesinthestudy, impact one-star data and of theimpact five-star reviews; (4) evidencefrom review-length than relying textrather read review thatcustomers onlyon suggests statistics. summary

on of of The Effect Word Mouth Sales: Online BookReviews

sourceof havebecomean important Onlineuserreviews and information consumers, to substituting complementing word-ofand forms business-to-consumer offline of other communication aboutproduct mouth Consequently, quality. combelievethata Web sitemustprovide manymanagers to content build brandloyalty(see, e.g., Fingar, munity and Sharma2000; McWilliam2000). Despitethis Kumar, is there no literature to belief, our knowledge, widespread content that playsanyrolein condocumenting community is It sumerdecisionmaking. seems thatsuch a finding a to for provision be a profnecessary prerequisite content itablestrategy. a to ex Therearemany reasons suspect antethat creating content could be a poor strategy. for forum community to it First, is notclearwhyuserswouldbother takethetime are to provide reviews whichthey notin anywaycornfor can freeride on retailers Second, competing pensated.1 to thereis nothing in investments recommender systems; the information from a consumer by provided using stop made elsewhere. one Web siteto inform Third, purchases over the user reviews, site cedes control a by providing reviewsmay depress information displayed;unfavorable thatsells to sales. This may be less of a threat a retailer different brandsthanto a manufacturer. Similarly, many favorable because interested proliferate partiescan freely reviews of ownproducts, reviews their maynotbe positive to sales.2Finally, and maynotfunction stimulate credible onlineuserreviews maynotbe usefuland maynotstimuis bias that inherlatesales becauseofthesampleselection reviewprocess.That is, a consumer ent in an amateur choosesto reada book or watcha movieonlyif he or she of believes thatthereis a high probability enjoyingthe this of In heterogeneity, experience. thepresence consumer bias will the impliesthat pool of reviewers have a positive in their withthe generalpopulation. evaluation compared be reviews Thus,positive by maysimply discounted potentialbuyers.3 behavIn thisstudy, characterize of we patterns reviewer reviews firms' on ior and examinetheeffect consumer of we availabledata In sales patterns. particular, use publicly and Amazon.com from twoleadingonlinebooksellers, the measuresof Barnesandnoble.com (bn.com),to construct books. Both bn.com and each firm'ssales of individual to on Amazon.com allow customers postreviews the site. in this at 'StevenLevitt blog ponders question length theFreakonomics the is designed answer followto Oureconometric ://www analysis .freakonomics.com/2005/07/why-do-people-post-reviews-on(http review amazon.html). If consumer postsa negative ingquestion: a cranky would the of a book on bn.combutnoton Amazon.com, to sales of that bookat bn.com relative thesales of that fall of A. is *Judith Chevalier WilliamS. BeineckeProfessor Financeand book at Amazon.com? isolatetheanswerto thisquesTo and Economics (e-mail: judith.chevalier@yale.edu), Dina Mayzlin is tion,we proposea "differences-in-differences" approach. Yale of Assistant Professor Marketing (e-mail:dina.mayzlin@yale.edu), for and Fora sampleofbooks,we measure reviews a proxy JMR The authorsthankthe two anonymous School of Management. timepoints. and bn.comover three sales at Amazon.com that the reviewers comments greatly for improved article. Theyalso thank as for at comments, well as Sharon in and We examine whether change thenumber valenceof a participants manyseminars helpful
Shin.The authors espeare Jackie Oster, Luan,David Godes,andJiwoong and encouragement the late Dick of for cially grateful the comments Wittink. JessieCheng and Tudor Olteanu providedexcellentresearch namesare listedin Bothauthors contributed assistance. equally,and their served editor thisarticle. as for order. Pradeep Chintagunta alphabetical firms on treatment recommendation of 2Fora theoretical systems which can anonymously reviews, Mayzlin(2006). see post that 99% of 3Ina different Resnick Zeckhauser and context, (2002) find thefeedback on ratings eBay.comarepositive. Research Journal Marketing of Vol. XLIII (August 2006), 345-354

Association (c)2006,American Marketing 1547-7193 ISSN: 0022-2437(print), (electronic)

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346

JOURNAL OF MARKETING RESEARCH, AUGUST 2006 each book at each site.At each site,thetop-selling book at thatsitehas a sales rankof one, and thelowersellersare We in ranks. included our data assignedhigher sequential books listed as "available" at Amazon.com and only bn.com.Not surprisingly, manyof the books drawnrandomlyfromthe Global Books in Printsamplewere not we availableforsale on theWeb sites.At thefirst period, found these basicdatafor1909oftheGlobalBooksinPrint sampleof books and for2261 of the past decade's bestsellers sample. all of Foreachbookin oursample, identified formats we thatbook (audio,paperback, and hardback, largeprint, so and We audiobooks.Amazon.com bn.com forth). excluded formats a of identical reviews all thedifferent for provide In is title. general, there one format is extremely that given dominant. Because we did notwantthedata setto include we sales andreviews information, examined only duplicate within title. then a We excluded for most the format popular format from analysis our booksforwhichthemostpopular at and bn.com. within titlewas different Amazon.com the if sellerat AmaFor example, thehardcover thebetter was was sellerat bn.com, zon.comand thepaperback thebetter our we excluded bookfrom sample.5 the that and Chevalier Goolsbee(2003a) report Amazon.com the claimsthat booksin thetop 10,000ranks, rankings for For are based on thelast 24 hoursand are updated hourly. are once a the booksranked 10,001-100,000, ranks updated the than100,000, sales ranks greater day.Forbooksranked are updated once a month 2000). Based on (Amazon.com in booksthat havenotbeenpurchased thepast thissystem, of hundreds month would notbe ranked. However, many have thousands books have a rankbutalmostcertainly of for Italie(2001) claimsthat fewer thanone sale permonth. bases therank theserarely books,Amazon.com purchased Barnesandon the total sales since Amazon's inception. all claimstoupdate ofitsrankings noble.com daily(bn.com havevery of the 2000).6Thus,with exception thebooksthat the (low sales) on Amazon.com, rankings reprehighranks bn.com of senta current provides snapshot sales. However, 650,000 books. There only sales ranksforapproximately but are booksat bn.comthatare availableforpurchase for whichtherankis "too high"(sales are too low) to be disand does not censorits sales ranks, closed. Amazon.com If of appearto rangeupward one million. we wereto they use as our sampleall books withpricesand ranksat both of sites,our samplewould containa largenumber books at that relatively are unpopupopular bn.comandrelatively lar at Amazon.com.However,books that are relatively at and at unpopular bn.com popular Amazon.com relatively would not appearin the sample,because theyhave been To censored out by bn.com's rank-reporting strategy. we address this asymmetry, removedfromour sample than 650,000 at Amazon.com. books withranksgreater thesebooks servesto remove More important, removing infreranksare updated booksforwhichtheAmazon.com The final sample contained2387 observations, quently.
selection are robustto severalformat 5The main results qualitatively criteria. of on 6Becausebn.com rankings tensof thousands booksthat provides be cannot completely one sale perday,thisstatement far average less than wouldnotprovide with us bn.com accurate. any requests, Despiterepeated moredetailon itsranking system.

to reviews overtime a particular for bookat one siterelative site a sales of theother predicts changein thesubsequent that bookat one siterelative theother. focusing the to on By differences between relative the sales ofthebookat thetwo of for we sites, are able to control thepossibleeffect unobservedbook characteristics bothreviews on and sales. By on acrosssitesovertime, conwe focusing thedifferences acrossthecustrolforthepossibility tastedifferences that in tomerpopulations the two sites differ a way that at affects reviews sales. both and on reviews tendto be Ourfindings that, average, suggest We the of at positive, especially bn.com. showthat addition in in reviews one siteresults an increase at new,favorable to site.We site thesales of a book at that relative theother reviewis findsome evidencethatan incremental negative in decreasing an booksales than incremental more powerful sales. Our results the on positivereviewis in increasing readand that of consumers actually length reviews suggest reviews,not merelythe averagestar respondto written statistic provided theWeb sites. by summary ranking we as the We organize restof thearticle follows:First, describethe data. Second, we describethe methodology. and the resultsof the cross-sectional Third,we present of differences-in-differences of theeffect reviews analyses we on sales. Finally, conclude. DATA and book characteristics Our data consistof individual user reviewdata collectedfromthe public Web sites of a Ourgoal was to generate repreand Amazon.com bn.com. of sentative sample sales.Because we didnothaveaccessto a sales thefirms' proprietary data,we approximatedrandom of sales as follows:First,we collecteda random sample sample of 3587 books fromGlobal Books in Print(see that www.GlobalBooksinPrint.com) werereleasedoverthe titleschosen at randomare 1998-2002 period.However, of to likely havelow sales becausea largefraction sales are of in concentrated a smallfraction books.It is possiblethat on influential thesales of wordofmouth maybe especially of are sources informathese booksbecausethere fewother we dataon tionon thesetitles. Thus,in addition, collected in best-seller that all 2818 titles appeared Publishers Weekly listsfrom 14, January 1991, to November11, 2002 (see a www.publishersweekly.com),period ending approxiour before datacollection. six mately months threeperiods:fora two-day We collecteddata during in May 2003, fora two-day 2003, periodin August period in May 2004. Foreachbookin our andfor two-day a period for the we sampleat each time, gathered pricecharged the timeuntilthe book would ship,the book, the promised of and the averagenumber starsthe of number reviews, five with a scale of one to fivestars, reviewers (on assigned starsbeingthebest). Most of thebooks have a promised of delivery 24 hours(96% at Amazon.comand 88% at bn.com). However,Amazon.comand bn.com use other suchas "Usuallyshipsin 2-3 days"or shipping categories, usuallyshipsin 1-2 weeks." "Specialorder: of detailedcharacteristics For all periods, extracted we of themostrecent reviews thebookpostedon theWeb 500 and of the site,including number stars assigned thedatethe the We reviewwas posted.4 also extracted "sales rank"of
the 4Forthe first periodonly,we also extracted fulltextof the most 500 recent reviews postedon theWeb site.

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The Effect Wordof Mouthon Sales of

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1 of had at sites first Table presents summary the 1087 which reviews statisticsthe for main variposted both atthe time ables interestourdata. number observations of in of The 2003) point. (May in sales Weexamined differences over May2003the shrinks across time because must available at books be 2003horizon over May2003-May and the 2004 Amazon.com bn.com the period beincluded and in first to August horizon. weexplained As sales at first but must at previously, ranks a par- inthe period's sample, they be available in a snapshotsales up of for both inboth first ticular momenttime sites the period the and subsequent represent period we to to a month. each other samples. most two The Thus, decided use a conservative for ofthe striking finding to the We inTable ishow 1 the are sites at approach measure rank-sales relationship.also positive reviews atboth and examined relationship changes sales the alltimes. all ofour the between in over For time and the sites, points atboth and inreviews over modal 2003 reviewfive and mean is stars, the for numberstars of May 2003-August period changes the 2003-July period. examined relation- any We the 2003 book is than stars. (with reviews)greater four May in the between there notable differences the across However, area few ship changes salesover May2003-May and in over May2003- sites are 2004period changes reviews the that apparent 1. highlight (1)For inTable We three: reviews dated, could the 2004period. Because are we in books oursample, bn.com are April prices significantly extract appropriate ofreviews the colthe from data can shown a paired be in (as t-test); Amazon.com (2) sample higher lected the at August and 2004 2003 May hasmore reviews bn.com, bn.com a much than and has periods. we on data rather more than con- higher fraction ofbooks our in sample have reviews that no Thus, rely sales-ranking ventional data. most ouranalysis, simply atall (54%for sales For of we bn.com versus for 13% Amazon); (3) and usethe sales ranks inour and the reviews slightly positive average bn.com, are more on at directly analysis discuss on of ranks than However, though rather sales. at impact reviews sales they again, areoverwhelmingly overall positive and and sites.8 (2001),Chevalier Goolsbee both Schnapp Allwine and that relationship Across we note changes pricing in or time, do not (2003a), Rosenthal allfind the (2005) big between and is linear. reviewing behavior. rankings Book increase book as ln(sales) ln(ranks) approximately popuand enables declines. leads books This to out samUsing Schnapp Allwine's methodology us to larity dropping ofthe translate ranks salesapproximationsthus sales into and calibrate relationship reviews sales.? the between and inAmazon.com intervening The relationships inthe are growth years. final
?This literature that for ln(sales) previous approximates Amazon.com, = 9.61- .781n(rank).bn.com, line the For in with work Chevalier of and Goolsbee we the down the that (2003b), scale relationship tocapture fact itssales 15%ofAmazon.com. are In addition, control the we for 24% = 9.825 .781n(rank)Amazon.com ln(sales) 7.9281n(rank) for and for bn.com. bn.com more than this 8Although is currently expensive Amazon.com, has always the historicallye.g., not been case and (see, Chevalier Goolsbee 2003a).

Table 1
SUMMARY DATA May 2003 Amazon.corn bn.com 2003 August Amazon.com bn.com May 2004 Amazon.com bn.com

Price Ranking Numberreviews book of per stars Average Fraction ofone-star reviews Fraction offive-star reviews Incremental per reviews book in stars Change average Fraction of books noreviews with Number of observations

13.97 (14.41) 129,799 (169,363) 60.99 (180.40) 4.14 (.70) .07 (.12) .57 (.29)

15.50 (14.75) 121,061 (156,903) 12.79 (44.55) 4.45 (.57) .03 (.08) .67 (.26)

.13 2387

.54 2387

13.85 (14.84) 134,303 (166,575) 59.79a (183.70) 4.13 (.71) .07 (.12) .57 (.29) 1.82 (5.49) -.010 (.16) .12 2082

15.2 (15.28) 122,377 (152,466) 13.11 (46.70) 4.16 (.62) .03 (.08) .67 (.26) .53 (2.27) -.010 (.14) .54 2082

13.56 (15.12) 123,112 (152,349) 68.31 (205.42) 4.06 (.70) .08 (.12) .51 (.29) 10.56 (67.59) -.006 (.50) .17b 1636

15.22 (15.79) 137,402 (166,939) 14.15 (42.30) 4.43 (.58) .04 (.09) .66 (.26) 1.85 (18.72) -.015 (.27) .49 1636

aThis number is slightly than average lower the number ofreviews book the 2003 in May Amazon.com This not toa loss reviews of per sample. is due this over period rather changethe but tothe in sample.few the A of books had high that a number of reviews not rank did have information 2003; inAugust we not them sample. thus, did include inthe bThe fraction of books noreviews Amazon.com upinthis with on This due ofreviews Amazon.com, goes period. is atleast partially tothe pruning by which discuss further herein. we in detail Notes: sample The allbooks our in database complete and anAmazon.com ofless 650,000, which most with data with rank than for the popucomprises lar format book Amazon.com same the popular ofthe atbn.com. are ofthe at isthe as most format book Means primary entry, standard data and deviations are parentheses. in

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JOURNALOF MARKETING RESEARCH, AUGUST 2006 are priatebecause in our case, there scale effects. Exogea of book's nously, largenumber peopleviewthe"popular" and bn.com,and a smallnumber of page at Amazon.com view the"unpopular" book's page at Amazon.com people andbn.com. The fraction these of viewers whogo on tobuy is plausibly function the reviewspostedon the site. a of variable, Although sales wouldbe theideal dependent log we use log rank.Moreover, Schnappand Allwine(2001) use proprietary on thesales of a sampleof books on data Amazon.com map the relationship to betweenranksand find that relationship the between ranks and sales; they log Thisfinding that log sales is close to linear. suggests in lieu ofsales data,log rank theappropriate is variable. dependent Because of the linearrelationship between ranksand log of log sales,ifwe wereto use ourestimate log sales as the the coefficients ourspecifiin variable, estimated dependent cations their and standard errors wouldsimply scaledby be a constant. The book's sales rankon a siteis a function a book of fixed effect a book-site fixed effect andother fac(vi), (j,'), tors.The book fixedeffect related factors is to suchas the offline the of promotion, quality thebook,and thepopularThe fixed effect related the is to ityof theauthor. book-site fitbetween book and thepreferences thecustomers the of ofthesite.Thatis, (1) ln(ranleis) (2) ln(rank13) the where rank denotes sales rank; superscripts andB the A to P refer Amazon.com and bn.com, respectively; denotes X of from the variables both price;10 denotes vector review sites (we allow Amazon.comreviewsto affect bn.com's and bn.comreviewsto affect Amazon's cuscustomers and variables of tomers); S is a vector dummy summarizing the shipping timespromised each Web site foreach by we book. For each of bn.comand Amazon.com, have a in 24 hours" variable thatindicates "usuallyships dummy a that "usu(themostfrequent category), dummy indicates For and allyshipsin 2-3 days," so forth. eachbook,S has a

do statistic ple, and thusthesummary rankings notchange muchovertime. The number incremental of reviews posted foreach bookbetween 2003 (recallthat May 2003 andJuly we measuresales changesfromMay to August,but we review is measure from changes May to July) small.In the first months, averagebook in our samplepicksup two the an additional and review Amazon.com an additional at half of a reviewat bn.com.However, overthelongerhorizon, are bookgains11 reviews more reviews posted. The typical atAmazon.com 2 at bn.comoverthe11-month and reviewThe that for reviews a inghorizon. datado notsuggest prior more than bookaresystematically orless enthusiastic given ones.The meanchangein average rating star of subsequent a book between 2003 and April2004 is within one May deviation zero. of standard to In addition theactualratings reviewers the give,there in be information contained themessage might additional text.Unfortunately, readingthe reviewsis an extremely are costlytask,and the measuresobtained verynoisy,as Godes and Mayzlin(2004) show.Textanalysisprograms measure areimperfect.9 a cost-effective However, relatively of text thelength is charof thereview (totalnumber typed in A it contained thereview. priori, is notcompletely acters) is a this clearhowto interpret measure. One possibility that on reviewrepresents more effort the part of the longer is Another is a reviewer. explanation possibility that longer We to a partial suprequired support "mixed"review. find Table 2 shows the freinterpretation: portfor the latter for quencydistribution all typesof reviewsforthe May and 2003 sampleand shows thatforboth sites,one-star reviews muchshorter two-star, are than five-star three-star, that is reviews. Another and four-star pattern emerges that at levels reviewers longer reviews all star Amazon.com post than their do peersat bn.com. MODEL SPECIFICATION and booki that sold onAmazon.com bn.com. is Consider variablewouldbe log of sales of a our dependent Ideally, site. book on a particular The reasonforthelog specificaestimates tionrather levelsis that log specification than the on variables the of theeffect a changein theindependent variable. Thisis approchangein thedependent percentage

data text ithas that these totrain analy9lndeed, been suggested weuse enthusiastic The is a review be sisprograms.idea thatfive-star must more the of loWe the of take log price estimateeffectpercentage in to can reviews orthree-star and program usethe thanfour-star a review, the change on that levels toglean change price percentage inrank. patterns measure ofenthusiasm. Table 2
REVIEW LENGTH AND STAR DISTRIBUTION FOR THE MAY 2003 SAMPLE Amazon.com Frequency Number Typed Characters of Frequency bn.com

Number Typed Characters of

reviews One-star Two-star reviews reviews Three-star Four-star reviews Five-star reviews Overall

8.97 7.53 10.56 19.89 53.05

765 916 997 949 812 854

3.44 4.07 6.00 19.27 67.22

558 599 566 577 508 529

in 2003. The includesbooks reviewsMay all with Notes: sample

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of The Effect Wordof Mouthon Sales

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1for promised time the variable ln(rank) Amazon.com at minus atboth is ship category Amazon.com hand-side time at when rise sales and bn.com. usefour We possible shipping categories ln(rank)bn.com. Again, prices atbn.com, at atAmazon.com three bn.com. and ranks become salesfall bn.com at relative to (i.e., larger the to The is Because expect unobservable effectsbe we fixed value coefficient Amazon.com). absolute ofthe price these larger bn.com, at that ranks more correlated independent with variables, omitting suggesting sales respond onthe variables.11 toprices bn.com atAmazon.com. is consistent at This effects bias coefficients review would the than in with that Ifwe assume the sites virtually that two are identical Chevalier Goolsbee's and (2003a)findings if[vik 4),12 of demandmore is at than terms their elastic bn.com atAmazon.com. (i.e., preferences readership's the the data Table Columnincludes measuresthe number of total wecaneliminate fixed effects differencing 3, 2, by ofreviews each for star of across sites: book the and average ranking reviews. we eachbook's the Specifically,include natural (3) total of at and logofthe numberreviewsAmazon.com the at natural ofthe numberreviewsbn.com. total of These log ln(rankf") when numberreviews zero. We are tozero set the of ifthere subtle are differences the sites alsoinclude dummies: that equals of 1 across two However, two the one takes value to if #[I data and another point (i.e., 1..tik weneed obtain P), at when title Amazon.com noreviews 0 othera has (and the and difference across sites across the data time: and that the of bn.com no has wise) one takes value 1 when - ln(rank = PAAln(Plk) reviews 0 otherwise). weinclude average the (and + r3BAln(PP) (4) Finally, A[ln(rankik) B)] of book's star value the at customer reviewseach inthe site + Axr + ASTI Ei. + regression. As weexpected, both for the for the sites, coefficients TheadvantageEquationis that allows touse of 3 it us star that improve books when suggest sales more because books' data reviews not do change over average value many rated highly, the more but effectstatistically is insignifitime. addition, In itallows toestimate price us the coeffi- are for To cant bn.com. illustrate magnitude effects, ofthe the there a of in cients because is not great amount variation we a book four reviews Amaacross time.13 the However, prices although differences-in- consider with five-star atboth zon.com bn.com a rank 500atboth Imagand and of sites. in Equation leaves with 4 differences us a specification one five-star reviews Amazon.com at was and smaller allow toestimate the inethat ofthe us all sample doesnot to review. the Given relationship coefficients ofinterest, the ithas advantageeliminating changed a one-star of ranks sales, coefficients that and the imply if the fixed bn.com between effects.for If, example, book-site-specific bn.com's of thebookwere ranking unchanged this by users like books Amazon.com simply computer lessthan review the atAmazon.com beexpected rank would change, users them them reviews), (buying lessandgiving worse to in decrease salesofapproxithe data eliminate problem. the Thus, torise 601,anestimated differencing would 20 Another way interpret useful to per webriefly the cross-sectional our mately books week. results, present although thecoefficient is to the of magnitude consider impact a focus Equation is 4. main review a book hasnoreviews either Our on on that sites. THE EFFECT OF REVIEWSON SALES estimates that the receives Amazon.com one imply if book review withone, two,or three its stars, rankon Cross-Sectional Analysis Amazon.com rise will (sales assuming its that rank on fall), In this we are that subsection, assume there no site- bn.com constant. if a However,thebookreceives stays fixed and the between specific effects examine relationship review fouror fivestars, rankon of its positive a book's customer reviews itssalesrank and across sites Amazon.com fall will (sales rise). 3 the results (seeEquation Table presents estimation for 3). Table Column focuses a differentofmeasuron 3, 3, way this Table Column presents results a for the 3, 1, sample. review valence. place average the In of of stars, fraction ing inwhich review no variables included, are regression only reviews are that one-star reviews the and fraction ofreviews at sites dummies. price that five-star The prices both andthe shipping are reviews included each Aswe are for site. reflect coefficients a combination ofown- cross-price and thecoefficients that reviews suggest five-star at elasticities bothsites.The pricecoefficient for expected, andone-star sales hurt in reviews sales a statistiimprove is positive statistically and Amazon.com significant, sugThe for significant atAmazon.com. coefficient way when that ranks Amazon.com cally reviews bn.comofthe at rise, prices sales gesting one-star for is expected and sign stabecome (i.e., coefficient isnegafall). price larger sales The atthe the However, coeffisignificant 7% level. This tive bn.com. is as expected; that left- tistically for recall the cient five-star isalmost but the for reviews zero of "wrong" the reviews large have coeffiNonetheless,one-star sign. 111n note the between review variables the and addition, that correlation in cients absolute relative thefive-star value to reviews, fixed effect induces in variables time. over However, dependence review that relatively one-star rare reviews a lot carry this that right-hand-side variables be correlated indicating the although implies the may ofweight consumers. result makes with This also sense inthe differences-in-differences itdoesnot the bias estimaspecification, tion results. when credibility the ofone-star five-star isconand reviews 12We havesomeevidence thetwosites'readers reviewers sidered. that and After theauthor, another or interested all, party, exhibit similar For we that correlation the preferences. example, find his own book publishing may "hype" orher by glowing of between ranks individual books high is the in (.825for 2387books log on reviews these sites.14 Web the can Although author post our sample). alsodonot differences first We find inreview across patterns
sites aresubject that For fiction received the specific. example, juvenile reviews serious and nonfiction received lowest the reviews both on highest sites more see and details, Chevalier Mayzlin 2003). (for 13This allows tocompare results previous also us our with work. 14For well-publicized, one in see example economics, Morin alleged (2003).

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JOURNAL OF MARKETING RESEARCH, AUGUST 2006 Table 3

THE EFFECT OF REVIEWS ON SALES 1

2
1.545*** (.155) -1.837*** (.144) -.215*** (.024) .131*** (.033) -.574*** (.187) -.154 (.100) -.184*** (.038) .024 (.017)

3
1.532*** (.156) -1.826*** (.145) -.205*** (.023) .13*** (.033) .075*** (.109) -.354** (.131)

4
2.147*** (.324) -2.67*** (.280) -.403*** (.050) .259*** (.052)

5
2.148 (.328) -2.58 (.282) -.373 (.050) .242 (.052)

Amazon.com ln(price) bn.com ln(price) Amazon.com of ln(number reviews) bn.com of ln(number reviews) Amazon.com no-reviews dummy bn.com no-reviews dummy Amazon.com averagestar rating bn.com averagestar rating of Amazon.com fraction five-star reviews bn.com fraction five-star of reviews Amazon.com fraction one-star reviews of bn.com fraction one-star reviews of Number observations Includes dummies? shipping R-square *p < .10.

1.556*** (.159) -1.801*** (.148)

-.418*** (.079) .145* (.088) -.256*** (.100) -.147 (.149) .483** (.255) -.836* (.467) -.704*** (.235) .061 (.188) 1.15** (.506) -.94* (.566) 1087 Yes .216 1087 Yes .203

2387 Yes .086

2387 Yes .138

2387 Yes .136

4 had at leastone review both Notes:In Columns1-3, thesampleis thecomplete on May 2003 sample.In Columns and 5, thesampleis thebooksthat is of sitesin May 2003. The dependent variable thedifference between log ranking thebook on Amazon.com thelog sales ranking thebookon the and of bn.com. Thatis, thedependent variable Ln(rankA) Ln(rankB). is

< **p .05. < ***p .01.

a largenumber meaningless of five-star reviews he cheaply, or she cannot preventothers from posting one-star reviews.15 in We examine robustness theseestimates Table3, of the 4 in the Columns and 5. In particular, Column4, we repeat of specification Column2, but we examineonlythe subhaveat leastone review each on sampleof 1087booksthat variablesbut measurethe site.We drop the "no-review" of of and for rankings thissubimpact number reviews star to The results similar thosewe presented are previsample. of are All ously. thesignsof thecoefficients interest as we and levThe magnitudes significance predicted. coefficient star are els forthe variablesmeasuring ratings somewhat in than thefullsample. larger the we use thecross-sectional sampleto examine Finally, reviewlengths and sales. To do this, between relationship in we repeatthespecifications Table 3, Columns4 and 5, of the including natural of the averagelength all the log
that for books one-star reviews competing 15It couldbe argued posting thatthis for We acknowledge could be a reasonablestrategy an author. it two maybe true, though is notat all clearthat bookson thesamesubject, are rather complements. than forexample, substitutes

reviewsforeach book at each site.The results appearin Table 4. The coefficient reviewlength positive for is and at and it is negative statistically significant Amazon.com, and insignificant bn.com.This suggeststhatwhenwe at controlfor the star ratingof the book, longerreviews the share. depress site'srelative Thereare (at least) two possibleinterpretations this of result. The first, whichwe view as the less likely, that is more useful, and more nuanced encouraginglonger, reviewsis actually harmful sales. However, is more to it that each site, length thereview correthe of is likely within latedwith enthusiasm thereview waysthat not the of in are For evenwithin the measures. example, by captured thestar realm of the statistically dominant 5-starreviews,there could be differing That is, some degreesof enthusiasm. "readlike" 4.5-star whilesomeread morelike 5reviews, be star reviews. Those that readlike4.5-star reviews might are to on becausethey morelikely be mixed longer average and (i.e., bothnegative positive aspectsof thebookarediscussed).We findsome evidenceforthisin our data. Conof siderthesubsample 1087 bookswithat leastone review that of at bothsites.Within group, consider subsample the of 5-star reviews. average The reviews Amaat length 5-star

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The Effect Wordof Mouthon Sales of Table 4

THE EFFECT OF REVIEW LENGTH ON BOOK MARKET SHARES

351

I Amazon.com ln(price) bn.com ln(price) Amazon.com of ln(numberreviews) bn.com of ln(numberreviews) Amazon.com star average rating star bn.com average rating Amazon.com fractionfive-star of reviews bn.com fractionfive-star of reviews Amazon.com fractionone-star of reviews bn.com fractionone-star of reviews Amazon.com review ln(average length) bn.com review ln(average length) of Number observations Includes dummies? shipping R-square
*p < .10. **p < .01.

2 2.093** (.326) -2.634** (.280) -.411** (.0503) .267** (.052)

2.127** (.325) -2.661** (.279) -.415** (.0501) .267** (.0518) -.405** (.0794) .138* (.0878)

.570** (.146) -.049 (.0917) 1087 Yes .217

-.441* (.242) .083 (.188) 1.550** (.511) -1.020* (.563) .598** (.151) -.052 (.0920) 1087 Yes .216

Notes: sample the The is books hadatleast review both that one on sites - Ln(rankB). inMay2003.Thedependent variable Ln(rankA) is

zon.com 795charactersbooks the is for with average star of and for books with rating4 orgreater, itis847characters the star of 4. the average rating lessthan Similarly,average review at is 5-star reviews a book for lengthbn.com492for with average of4 orgreater, itis 675for the and 5rating star reviews a book the for with average oflessthan rating 4. Ifweassume the that books the with lower rataverage have "less enthusiastic" reviews, atleast 5-star this ings the that within 5-star the review suggests even category, length iscorrelated the with reviewer's ofenthusiasm level for the book. ofthe ofthe results, Regardless interpretationlength the results tosuggest customers and seem that read respond tothe review contenteach However, reviews at site. longer donot stimulate sales. necessarily
Differences-in-Differences Analysis

books Thespecification weestimate analyzed previously.16 isgiven Equation in 4. Ofthesample 2387books, 2082books of were only and available both inthe at sites second period contained rank information sites. at both Thisshort differences-inis differences window useful time it that because is likely the characteristics users ofsite remain underlying relatively over period. constant this our is However, analysis limited as we little because, Table1 shows, have relatively new reviewing over time activity this horizon. of estimation inTable Columns The resultsthe 1 5. appear 2 and present in estimation that results include differences in stars the of and average and numberreviews differences the fraction ofone-star and reviews five-star reviews, respecfor whole 4 of Columns tively, the sample 2082books.17 and present results the 5 the for same for the specifications of that new at sites. sample 275books had reviewsboth The onprice inTable are elasticities 5 lower magnitudes than the in cross-sectional The on specification.coefficient in on is no changes prices Amazon.com longer significant. This beduetorelatively variance prices in little over may In time. contrast, ofthe most coefficients onreview variables actually are in than crosshigher magnitude inthe section even some no sample, though are longer significant. most results the of previous section Qualitatively, ofthe arereplicated. anincrease the in average rating star Thus, onAmazon.com time over resultshigher in sales relative of the book Amazon.com time month the on over (one after reviews consideration been under have The posted). opposite holds for in true changes average rating bn.com. star on The results the for fraction offive-star and reviews one-star reviews alsoconsistent this are with intuition. we Again, find evidence one-star that reviews a greater have impact than five-star onthe reviews site. same Asweexpected, an in difference numberreviews Amaincreasethe inthe of on zon.com time associated greater over is with relative sales ofthe book Amazon.com time. only at over The exception we find for difference is the in number reviews of on bn.com time. over the coefficient "wrong" hasthe Notably, it of that (albeit,issignificant inthe sign only sample books hadnew reviews each on note the However, that difsite). in change the ference the in number reviews Amaof at zon.com the and change the in numberreviewsbn.com of at continues negative. anincreasethe tobe in number of Thus, reviews Amazon.com at relative bn.com to continues to sales relative improve atAmazon.com tobn.com. Toobtainsample more review a with new and activity as an additional robustness we examined in check, changes reviews changes rankingswedidpreviously, and in as but we examined change rankings May2003to the in from 2004. new raise The data many issues. May important First, because books alloneyear the are to older, arelikely they beless and that of books become popular, wefind some the or unavailablehave of Thus, sample missing rankings. the usable books shrinks1636. to we that Second, discovered Amazon.com been had in active pruning reviews the from
16That Aln(PB book = ln(PB for in 2003 book is, i) i) posted August for in book whereas ofreviewsB on ln(PB i), Aln(number posted May2003for for Amazon.com booki) = ln(numberreviewsB July of in 2003for book of in book i) - ln(numberreviewsB May2003for i). 17If book noreviews, assume the a has we that average rating the star of book the is mean the of books oursample that In addition, in for site. we for control changes noreviews reviews, so forth. from to and

As we discussed omitted book-site fixed previously, effects bias preceding Toeliminate could the results. a possible fixed we review for data site-specific effect, collected 8 and 8,2003, the and ranks, and May July prices, shipping data posted August 2003, the as on for sample 2387 of 8,

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352

JOURNAL MARKETING OF RESEARCH,AUGUST2006 Table5

THE EFFECT OF TWO-MONTH CHANGES IN REVIEWS ON CHANGES IN SALES 1 2 .106 (.232) -1.425*** (.205) -.675** (.326) -.566 (.360) 3 .096 (.233) -1.410*** (.205) -.563* (.318) -.327 (.332) 4 1.591* (.874) -1.500*** (.519) -1.092 (.955) -1.045* (.604) -1.868 (1.274) .832 (.521) -.177 (.536) 1.175** (.587) 2.542** (1.283) -1.057 (1.730) -.003 (.074) .114 (1.730) .061 (.081) -.208 (.231) 2082 Yes .0391 2082 Yes .0398 2082 Yes .037 275 Yes .0947 275 Yes .0951 -3.800 (3.209) 1.095 (1.194) 4.138 (8.819) -3.621 (2.881) .066 (.198) -.015 (.189) .329** (.153) -.377 (.310) 275 Yes .0562 5 1.419 (.892) -1.447*** (.521) -1.026 (.953) -1.146* (.600) 6 1.228 (.881) -1.368*** (.522) -1.096 (.963) -1.094* (.598)

Amazon.com Aln(price) bn.com Aln(price) Amazon.com of Aln(number reviews) bn.com of Aln(number reviews) Amazon.com star Aaverage rating bn.com star Aaverage rating Amazon.com Afraction five-star of reviews of reviews bn.com Afraction five-star Afraction one-star of reviews Amazon.com bn.com Afraction one-star of reviews reviews Amazon.com newfive-star reviews bn.com newfive-star newone-star reviews Amazon.com newone-star reviews bn.com Number observations of dummies? Shipping R-square *p < .10.

.107 (.232) -1.426*** (.205) -.792** (.342) -.324 (.332) -.460* (.268) .708** (.319)

no to a that for from bookhaving reviews times well as dummies control changes as in also Notes:The specification includes changes promised shipping for variables. samplein Columns The we the For the and with cross-sectional reviews, so on (in keeping specification). brevity, omit coefficients these having had of 4-6 is thesubsample thebooksthat 2003. The samplein Columns wereavailableon bothsitesin May 2003 andAugust 1-3 is thesetofbooksthat Amazon.com If are variable A(ln[rankA]ln[rankB]). no reviews present, is newreviews at 8, May 8 andJuly 2003. The dependent posted bothsitesbetween each each variables included characterize bookfor are that for variables setat themeeting rating thesite.Unreported are star andbn.com dummy star-ratings in in wereno reviews May werereviews thelater in siteintoone ofthefollowing (2) (1) period; there categories: Therewereno reviews May 2003,butthere were reviews and in wereno incremental werereviews May 2003,butthere in wereno reviews thelater thereafter; (4) there 2003,andthere (3) period; there reviews thereafter. in wereincremental reviews May 2003,andthere

**p< .05. < ***p .01.

total 296 had fewer sites.Of the1636 booksin thesample, on in reviews Amazon.com May 2004 thanin May 2003. had reviews removed these296 booksclearly by Although whenthesereviews we Amazon.com, do notknowexactly wereremoved we (though knowthatwe did nothave any overtheMay 2003booksexperiencing dropin reviews a 2003 period).18 August
to 18There manyopportunities read bloggers'accountsof their are for reviewsbeing removed Amazon.comand theirhypotheses why by of does notappear be strictly to The reviews removed. removal reviews are in of on from lowertail.The averagenumber stars Amazon.com May the wouldhavefewer reviews May 2004 is 4.36, com2003 forbooksthat by in 4.04 forbooksthat wouldhave moreor equal reviews May paredwith reviews that irrelevant. are One states that removes it 2004. Amazon.com was removed this we review that noticed during periodwas a reviewof a

of Table 6 repeatsthe specifications Table 5 usingthe in horizonsample.As was the case previously, one-year had the Columns1-3, we constrain sampletothebooksthat morereviewsin May 2004 thanin May 2003. However, recall thatAmazon.com appearsto have begunremoving and thus reviews overtheAugust2003-May 2004 period, fall thebooksthat intothissampleare thoseforwhichthe of of number new reviewsexceeds the number reviews removed. for The results the averagestarspecification Amafor and zon.comare entirely signin insignificant of thewrong Conbooks withno newreviews. thesamplethat contains
made extensive reference to textbook whichthereviewer in game theory viewsoftheauthor. thepolitical religious and

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The Effect Wordof Mouthon Sales of

353

Table6
THE EFFECT OF ONE-YEAR CHANGES IN REVIEWS ON CHANGES IN SALES 1

Amazon.com Aln(price) bn.com Aln(price) Amazon.com of Aln(number reviews) bn.com of Aln(number reviews) Amazon.com star Aaverage rating star bn.com Aaverage rating Amazon.com Afraction of five-star reviews bn.com of five-star Afraction reviews Amazon.com Afraction ofone-star reviews bn.com Afraction ofone-star reviews Amazon.comfive-star new reviews bn.com five-star new reviews Amazon.comone-star reviews new new bn.com one-star reviews Numberobservations of dummies? Shipping R-square
*p< .10. **p< .05.
***p<.01.

-.124 (.251) -3.859*** (.287) -.033 (.032) .026 (.085) .020 (.056) .186* (.110)

2 -.150 (.251) -3.859*** (.287) -.035 (.032) .046 (.087)

-.121 (.251) -3.853*** (.287) -.038 (.032) .005 (.089)

.695 (.594) -5.498*** (.586) -.064 (.161) -.005 (.133) -.189 (.351) .405** (.192)

5 .543 (.596) -5.444*** (.586) -.008 (.160) -.008 (.142)

.669 (.588) -5.478*** (.581) .010 (.159) -.039 (.133)

.108 (.240) .024 (.328) -.020 (.613) -2.049*** (.793) -.171** (.067) .153* (.087) .052 (.075) -.175 (.125) 1636 Yes .126

-1.323 (1.772) -.036 (.517) -1.787 (2.503) -2.849** (1.147) -.336* (.187) .453*** (.176) .304** (.136) -.266* (.162) 459 Yes .236

1636 Yes .1223

1636 Yes .1249

459 Yes .2165

459 Yes .2222

Notes: specification The also includes in as times that for from no to changespromised shipping aswell dummies control changes a book having reviews and with cross-sectional For weomit coefficients variables. sampleColumns for these The in reviews, soon(in having keeping the specification). brevity, the at sites and 2004. dependent is A(ln[rankA] variable Ifno are Amazon.com and posted both between 2003 April The ln[rankB]). reviews present, May bn.com variables set star for site. are that each for site star-ratings are atthe meeting rating the Unreported variables included characterizebook each dummy into ofthe one were in but were in later were in 2003, there reviewsthe period; there noreviewsMay (1) following categories:There noreviewsMay (2) and were in later were in but were reviews and were 2003, there noreviewsthe period; there reviewsMay 2003, there noincremental thereafter; there (3) (4) in reviewsMay and were reviews 2003, there incremental thereafter.
1-3 is theset of booksthat wereavailableat bothsitesin May 2003 and May 2004. The samplein Columns 4-6 consists booksthat of had new reviews

the on in stars for versely, coefficientchange average bn.com significant of theexpected In the is and sign. that the of and specificationexamines fractionsone- fivestar we that diminished created sales reviews, find the by additional one-star reviewsbn.com at remain and large statistically significant. Because were we concerned the that pruningreviews of Amazon.com biasthesamples, attempted we a by might that be more specification we believed might somewhat to pruning robustthe exercise. with full Beginning the samwe whether a book atleast had books, coded pleof1636 one more one-star than had review it before whether and the book at least more had one five-star than had review it in before. a bookcould a one-star add Thus, principle,

whethergained lostreviews it review or and overall, it couldadd a five-star review whether gained lost it or reviews overall. Remember ifa person that chooses read to allreviews, reviews presented most the are from recent, and the reader page toread must back older reviews. AmaWith zon.com itis for that reviews, possible, example, an pruning older one-star wasremoved, review whereas one-star a new review added, was the of reviews keeping fractionone-star the same moving one-star toa more but the review prominent on page. location the Table Columns and 1-2 4-5, 6, records book unchanged, though possibly this as even ithas from Columns and6 3 changed thereader's perception. show results this the of specification. that coeffiNote the cients all the are five-star coeffiexpected the sign; new

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354

JOURNAL OF MARKETING RESEARCH, AUGUST 2006

in cientsare significant bothsamples, thenewone-star and in coefficients significant the sample of 275 books. are review a has we that Notably, do notobserve a newone-star review on relative sales thana newfive-star impact greater an of on thesamesite.Thisis notsimply artifact thespecifiwe cationand seemsto be samplespecific; comparison, for thisspecification the shorter for timedifference estimate the (see Table5, Columns3 and 6). In thissample, impact in than ofthenewone-star reviews greater magnitude the is ofnewfive-star reviews. impact CONCLUSION We analyze reviewing practicesat Amazon.comand at that to bn.com find customer and reviews tend be positive at bothsitesand that are moredetailed Amazon.com. they the sales of a that relative estimates Ourregression suggest across to book acrossthetwo sitesare related differences of for thesitesin thenumber reviews thebook and in difof ferences acrossthesitesin theaveragestarranking the reviews. word of mouth This evidencesuggeststhatcustomer retail behavior twoInternet at affects consumer purchasing salesis a preThe notion customer that content affects sites. in content to for quality have requisite differences customer or across on differences revenues profitability in anyimpact that short showing of retailers. ourevidence However, stops For from such content. example, retailers providing profit in there nothing our evidencethatshowsthatcustomer is reviewsdo not merelymove sales aroundacross books has morereviewwithin site.BecauseAmazon.com many a ers thanrivalsand because, on average,its reviewsare that to it and lengthy positive, seemsplausible speculate the it than is of total number bookssold atAmazon.com higher features. of review the wouldbe without provision customer behave"as if' our showthat customers Furthermore, results and the fitbetween customer book is improved using by extension this to An reviews screen to purchases. interesting a cusresearch would be to examinewhether improving

decrease increase information or the containedreviews. in on On theone hand, increased an dependence posted reviews could make them informative. other On the less if or review a quick hand, anunfair an"incorrect" prompts the to this increase overall ofreviews value reaction, could customers. REFERENCES with cusAmazon.com personal correspondence e-mail (2000),

affects with satisfaction hisorher tomer's purchases subsecustomer loyalty. quent for issues we are worthwhile that leave furThere several the reviewwe For ther research. example, donot explore of the This generating process. couldaffect usefulness if in reviews several ways. example,reviewimportant For this either ersrespond previously reviews, may to posted

John tomer service (May agent Armstrong, 15). e-mail with bn.com (2000),personal correspondence customer service Charlie, 14). (January agent Prices and J. Chevalier, andA. Goolsbee (2003a),"Measuring and BarnesandPrice Competition Online:Amazon.com 1 and Noble.com," Quantitative Marketing Economics, (2), 203-222. Amazon -and Internet Retailers: -(2003b), "Valuing in in MicroeconomandBarnes Noble," Advances Applied and Vol. the ics: Organizing NewIndustrial Economy, 12,Michael Elsevier Science. ed. Baye, Amsterdam: of of on and D. Mayzlin "TheEffect Word Mouth (2003), NBER Working Sales: OnlineBook Reviews," PaperNo. 10148. and EP., (2000),Enterprise Fingar, H. Kumar, T. Sharma FL: Meghan-Kiffer Press. Commerce. Tampa, D. Online Conversations to Godes, andD. Mayzlin (2004), "Using Word-of-Mouth 23 Science, Communication," Marketing Study (4),545-60. H. Bottom NotExactly Turn10: Italie, (2001),"Amazon's Page ers," Sun-Times, 17), Chicago (August 28. MarketD. Chat Mayzlin, (2006),"Promotional ontheInternet," 25 Science, (2), 157-65. ing Online Brands G. McWilliam, (2000), "Building Strong Through 41 MIT Communities," Sloan Review, (3),43-54. Management His R. Invents toAnswer Critics," Fans Morin, (2003),"Scholar TheWashington (February C01. Post, 1), in "Trust P. Resnick, andR. Zeckhauser (2002), Among Strangers of Transactions: Internet Empirical Analysis eBay'sReputation The in Microeconomics: Ecoin System," Advances Applied R. Vol. and nomics theInternet E-Commerce, 11,Michael of 127-57. ed.Amsterdam: Elsevier Science, Baye, BooksSoldby How Morris Rosenthal, (2005), "Estimating Many at Amazon Rank," (accessed May 1, 2005),[available http:// www.fonerbooks.com/surfing.htm]. of M. (2001),"Mining BookDatafrom Schnapp, andT. Allwine Webmining at UCB/SIMS Amazon.com," presentedthe paper at March24, 2006), [available http:// conference, (accessed www.sims.berkeley.edu:8000/resources/affiliates/worksho webmining/Slides/ORA.ppt].

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