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Digital Content Strategies

  • Daniel Halbheer

    ()

    (Department of Business Administration (IBW), University of Zurich)

  • Florian Stahl

    ()

    (Department of Business Administration (IBW), University of Zurich)

  • Oded Koenigsberg

    ()

    (Department of Marketing, London Business School)

  • Donald R. Lehmann

    ()

    (Marketing, Columbia Business School)

This paper studies content strategies for online publishers of digital information goods. It examines sampling strategies and compares their performance to paid content and free content strategies. A sampling strategy, where some of the content is offered for free and consumers are charged for access to the rest, is known as a metered model in the newspaper industry. We analyze optimal decisions concerning the size of the sample and the price of the paid content when sampling serves the dual purpose of disclosing content quality and generating advertising revenue. We show in a reduced-form model how the publishers optimal ratio of advertising revenue to sales revenue is linked to characteristics of both the content market and the advertising market. We assume that consumers learn about content quality from the free samples in a Bayesian fashion. Surprisingly, we find that it can be optimal for the publisher to generate advertising revenue by offering free samples even when sampling reduces both prior quality expectations and content demand. In addition, we show that it can be optimal for the publisher to refrain from revealing quality through free samples when advertising effectiveness is low and content quality is high.

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File URL: http://repec.business.uzh.ch/RePEc/zrh/wpaper/329_IBW_full.pdf
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Paper provided by University of Zurich, Department of Business Administration (IBW) in its series Working Papers with number 329.

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Length: 34 pages
Date of creation: Feb 2013
Date of revision:
Handle: RePEc:zrh:wpaper:329
Contact details of provider: Web page: http://www.business.uzh.ch

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  1. Amir Heiman & Bruce McWilliams & Zhihua Shen & David Zilberman, 2001. "Learning and Forgetting: Modeling Optimal Product Sampling Over Time," Management Science, INFORMS, vol. 47(4), pages 532-546, April.
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  17. Monic Sun, 2011. "Disclosing Multiple Product Attributes," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 20(1), pages 195-224, 03.
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