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Content and Advertising in the Media: Pay-TV versus Free-To-Air

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Author Info
Peitz, Martin
Valletti, Tommaso

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Abstract

We compare the advertising intensity and content of programming in a market with competing media platforms. With pay-tv media platforms have two sources of revenues, advertising revenues and revenues from viewers. With free-to-air media platforms receive all revenues from advertising. We show that if viewers strongly dislike advertising, the advertising intensity is greater under free-to-air television. We also show that free-to-air television tends to provide more similar content whereas pay-tv stations differentiate their content. In addition, we compare the welfare properties of the two different schemes.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 4771.

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Date of creation: Dec 2004
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Handle: RePEc:cpr:ceprdp:4771

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Related research
Keywords: advertising; media; product differentiation; two-sided markets;

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Find related papers by JEL classification:
D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media

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  1. Kind, Hans Jarle & Schjelderup, Guttorm & Stähler, Frank, 2007. "Newspapers and Advertising: The Effects of Ad-Valorem Taxation under Duopoly," Discussion Papers 2007/5, Department of Finance and Management Science, Norwegian School of Economics and Business Administration. [Downloadable!]
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  2. Crampes, Claude & Haritchabalet, Carole & Jullien, Bruno, 2006. "Advertising, Competition and Entry in Media Industries," IDEI Working Papers 374, Institut d'Économie Industrielle (IDEI), Toulouse. [Downloadable!]
    Other versions:
  3. Mark Armstrong & Helen Weeds, 2005. "Public Service Broadcasting in the Digital World," Industrial Organization 0507010, EconWPA. [Downloadable!]
  4. Schmidtke, Richard, 2006. "Two-Sided Markets with Pecuniary and Participation Externalities," Discussion Papers in Economics 963, University of Munich, Department of Economics. [Downloadable!]
  5. Anderson, Simon P & Gabszewicz, Jean Jaskold, 2005. "The Media and Advertising: A Tale of Two-Sided Markets," CEPR Discussion Papers 5223, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  6. Hans Jarle Kind & Tore Nilssen & Lars Sørgard, 2005. "Financing of Media Firms: Does Competition Matter?," CIE Discussion Papers 2005-08, University of Copenhagen. Department of Economics. Centre for Industrial Economics. [Downloadable!]
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  7. Li, Ming & Tymofiy Mylovanov, 2009. "Credibility for Sale: the Effect of Disclosure on Information Acquisition and Transmission," Working Papers 09008, Concordia University, Department of Economics, revised Oct 2009. [Downloadable!]
  8. Gomes, Orlando, 2006. "The dynamics of television advertising with boundedly rational consumers," MPRA Paper 2847, University Library of Munich, Germany. [Downloadable!]
  9. Ramon Caminal, 2009. "Markets and linguistic diversity," UFAE and IAE Working Papers 781.09, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC). [Downloadable!]
  10. Hans Jarle Kind & Frank Stähler, 2009. "Market Shares in Two-Sided Media Industries," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  11. Fabrizio Germano, 2008. "On Commercial Media Bias," Economics Working Papers 1133, Department of Economics and Business, Universitat Pompeu Fabra, revised Apr 2009. [Downloadable!]
  12. Richard Schmidtke, 2006. "Two-Sided Markets with Pecuniary and Participation Externalities," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  13. Ulrich Kaiser, 2007. "Do Media Consumers Really Dislike Advertising? An Empirical Assessment of a Popular Assumption in Economic Theory," CIE Discussion Papers 2007-08, University of Copenhagen. Department of Economics. Centre for Industrial Economics. [Downloadable!]
  14. Richard Schmidtke, 2006. "Two-Sided Markets with Pecuniary and Participation Externalities," Discussion Papers 133, SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich. [Downloadable!]
  15. Stennek, Johan, 2007. "Exclusive Quality - Why Exclusive Distribution May Benefit the TV Viewers," CEPR Discussion Papers 6072, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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