An economic analysis of online streaming music services
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.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
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.:
- Simon P. Anderson & Stephen Coate, 2003.
"Market Provision of Broadcasting: A Welfare Analysis,"
Virginia Economics Online Papers
358, University of Virginia, Department of Economics.
- Simon P. Anderson & Stephen Coate, 2005. "Market Provision of Broadcasting: A Welfare Analysis," Review of Economic Studies, Oxford University Press, vol. 72(4), pages 947-972.
- Deneckere, R. & McAfee, R.P., 1995.
9508, Wisconsin Madison - Social Systems.
- Wauthy, Xavier, 1996.
"Quality Choice in Models of Vertical Differentiation,"
Journal of Industrial Economics,
Wiley Blackwell, vol. 44(3), pages 345-53, September.
- 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).
- Jaskold Gabszewicz, Jean & Shaked, Avner & Sutton, John & Thisse, Jacques-Francois, 1986. "Segmenting the market: The monopolist's optimal product mix," Journal of Economic Theory, Elsevier, vol. 39(2), pages 273-289, August.
- Duchene, Anne & Waelbroeck, Patrick, 2006. "The legal and technological battle in the music industry: Information-push versus information-pull technologies," International Review of Law and Economics, Elsevier, vol. 26(4), pages 565-580, December.
- Gayer, Amit & Shy, Oz, 2006. "Publishers, artists, and copyright enforcement," Information Economics and Policy, Elsevier, vol. 18(4), pages 374-384, November.
- Simon P., ANDERSON & Jean J., GABSZEWICZ, 2005.
"The media and advertising : a table of two-sided markets,"
Discussion Papers (ECON - Département des Sciences Economiques)
2005060, Université catholique de Louvain, Département des Sciences Economiques.
- Anderson, Simon P. & Gabszewicz, Jean J., 2006. "The Media and Advertising: A Tale of Two-Sided Markets," Handbook of the Economics of Art and Culture, Elsevier.
- 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.
- ANDERSON, Simon P. & GABSZEWICZ, Jean J., . "The media and advertising: a tale of two-sidedmarkets," CORE Discussion Papers RP 1888, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- ANDERSON, Simon P. & GABSZEWICZ, Jean J., 2005. "The media and advertising : a tale of two-sided markets," CORE Discussion Papers 2005088, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Mussa, Michael & Rosen, Sherwin, 1978. "Monopoly and product quality," Journal of Economic Theory, Elsevier, vol. 18(2), pages 301-317, August.
- Alan B. Krueger, 2005. "The Economics of Real Superstars: The Market for Rock Concerts in the Material World," Journal of Labor Economics, University of Chicago Press, vol. 23(1), pages 1-30, January.
- Reisinger, Markus, 2012. "Platform competition for advertisers and users in media markets," International Journal of Industrial Organization, Elsevier, vol. 30(2), pages 243-252.
- Spiegel, Yossi & Yehezkel, Yaron, 2003. "Price and non-price restraints when retailers are vertically differentiated," International Journal of Industrial Organization, Elsevier, vol. 21(7), pages 923-947, September.
- Yoon, Kiho, 2002. "The optimal level of copyright protection," Information Economics and Policy, Elsevier, vol. 14(3), pages 327-348, September.
- Choi, Chong Ju & Shin, Hyun Song, 1992. "A Comment on a Model of Vertical Product Differentiation," Journal of Industrial Economics, Wiley Blackwell, vol. 40(2), pages 229-31, June.
- Liebowitz, Stan J, 2006. "File Sharing: Creative Destruction or Just Plain Destruction?," Journal of Law and Economics, University of Chicago Press, vol. 49(1), pages 1-28, April.
- Bae, Sang Hoo & Choi, Jay Pil, 2006. "A model of piracy," Information Economics and Policy, Elsevier, vol. 18(3), pages 303-320, September.
- Peitz, Martin & Waelbroeck, Patrick, 2006. "Piracy of digital products: A critical review of the theoretical literature," Information Economics and Policy, Elsevier, vol. 18(4), pages 449-476, November.
When requesting a correction, please mention this item's handle: RePEc:eee:iepoli:v:25:y:2013:i:2:p:81-91. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Shamier, Wendy)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.