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An economic analysis of online streaming music services

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  • Thomes, Tim Paul

Abstract

Streaming music services represent the music industry’s greatest prospective source of revenue and are well established among consumers. This paper presents a theory of a streaming music business model consisting of two types of services provided by a monopolist. The first service, which offers access free of charge, is of low quality and financed by advertising. The second service charges its users and is of high quality. The analysis demonstrates that if users are highly tolerant of commercials, the monopolist benefits from advertising funding and hence charges a high price to users of the fee-based service to boost demand for the advertising supported service. The analysis addresses the welfare consequences of such a business model and shows it is an effective policy for combating digital piracy.

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Bibliographic Info

Article provided by Elsevier in its journal Information Economics and Policy.

Volume (Year): 25 (2013)
Issue (Month): 2 ()
Pages: 81-91

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Handle: RePEc:eee:iepoli:v:25:y:2013:i:2:p:81-91

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Web page: http://www.elsevier.com/locate/inca/505549

Related research

Keywords: Advertising media; Music industry; Streaming music;

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References

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  1. Wauthy, X., 1994. "Quality Choice in Models of Vertical Differentiation," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 1994033, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
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