Price Discrimination and Audience Composition in Advertising-Based Broadcasting
AbstractTraditionally, media like TV and radio, but also the Internet, have been characterized by free access (by consumers having the necessary hardware), with services supported through advertising revenues. Profitability in these markets depends on the capability of attracting audience. Strategic choices, however, also depend on the relationship with the dual market for advertising services. In this paper, a model is introduced, which has two distinguishing features. First, the multidimensional nature of competition in media markets is acknowledged, through explicit modeling of vertical and horizontal differentiation. Second, the price of advertising depends on the expected audience composition, not simply on its magnitude. It also depends on the broadcasters' capability of effectively price-discriminate among advertising customers. It is found that market equilibria depend on a number of critical factors: the amount and type of price discrimination in advertising, the correlation between formats and audience composition, the relative profitability of the different market segments, and diseconomies of scale in program quality.
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Bibliographic InfoPaper provided by Department of Economics, University of Venice "Ca' Foscari" in its series Working Papers with number 2007_07.
Length: 23 pages
Date of creation: 2007
Date of revision:
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Postal: Cannaregio, S. Giobbe no 873 , 30121 Venezia
Web page: http://www.unive.it/dip.economia
More information through EDIRC
Advertising; Media Industries; Broadcasting; Price Discrimination; Television; Radio; Differentiation.;
Find related papers by JEL classification:
- L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
- M37 - Business Administration and Business Economics; Marketing; Accounting - - Marketing and Advertising - - - Advertising
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-02-09 (All new papers)
- NEP-COM-2008-02-09 (Industrial Competition)
- NEP-CUL-2008-02-09 (Cultural Economics)
- NEP-IND-2008-02-09 (Industrial Organization)
- NEP-MIC-2008-02-09 (Microeconomics)
- NEP-MKT-2008-02-09 (Marketing)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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