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Business models for streaming platforms: content acquisition, advertising and users

Author

Listed:
  • E. Carroni
  • D. Paolini
Abstract
A streaming platform obtains contents from artists and offers commercial spaces to advertisers. Users value contents' variety and quality of the service and are heterogeneously bothered by ads. Two solutions can be proposed to users. If they pay a positive price, they subscribe to a commercial-free service with an upgrade of quality (Premium). Otherwise, they have free access to a service of a basic quality. We find that a wider audience gives incentives to the platform to increase both the advertising intensity and the quality upgrade in the Premium. As a consequence, some people move to the Premium. At the limit, the platform opts for a purely subscription-based business model as the audience reaches a certain level. The parsimonious model we propose is able to give a rationale to the emergence of different business models in the streaming market as well as to the (end of the) disputes between artists and the Spotify model.

Suggested Citation

  • E. Carroni & D. Paolini, 2020. "Business models for streaming platforms: content acquisition, advertising and users," Working Paper CRENoS 202001, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
    • Handle: RePEc:cns:cnscwp:202001
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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

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    Cited by:

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    2. Shota Ichihashi & Byung-Cheol Kim, 2023. "Addictive Platforms," Management Science, INFORMS, vol. 69(2), pages 1127-1145, February.
    3. Gang Liu & Fengyue An, 2021. "Video Platforms’ Value-Added Service Investments and Pricing Strategies for Advertisers," Sustainability, MDPI, vol. 13(24), pages 1-24, December.
    4. Jin, Laiqun & Cao, Kairui & Li, Jiaye & Xu, Qunfang, 2024. "Information infrastructure construction and optimization of resources allocation among firms: Evidence from “Broadband China” strategy," International Review of Economics & Finance, Elsevier, vol. 91(C), pages 36-53.
    5. Rendrikson Soares & André Araújo, 2024. "Towards a New Business Model for Streaming Platforms Using Blockchain Technology," Future Internet, MDPI, vol. 16(6), pages 1-18, June.
    6. Alessandro De Chiara & Ester Manna & Antoni Rubí-Puig & Adrian Segura-Moreiras, 2021. "Efficient copyright filters for online hosting platforms," Working Papers 21-03, NET Institute.

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    More about this item

    Keywords

    Multi-Sided Markets; Media; Advertising; Second-degree price discrimination; Platform;
    All these keywords.

    JEL classification:

    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
    • M37 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Advertising

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