Difference between revisions of "Thomes (2013)"
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|Abstract=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. | |Abstract=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. | ||
|Authentic Link=http://www.sciencedirect.com/science/article/pii/S0167624513000103 | |Authentic Link=http://www.sciencedirect.com/science/article/pii/S0167624513000103 | ||
+ | |Reference=Liebowitz (2006a); Peitz and Waelbroeck (2004); Resinger (2012); | ||
|Plain Text Proposition=• This paper examines a monopolistic streaming music business model with two vertically differentiated types of services. | |Plain Text Proposition=• This paper examines a monopolistic streaming music business model with two vertically differentiated types of services. | ||
• The low-quality service offers free access and is advertising based, while the high-quality service is fee based. | • The low-quality service offers free access and is advertising based, while the high-quality service is fee based. | ||
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• Such a streaming music business model may be an effective means to combat digital piracy | • Such a streaming music business model may be an effective means to combat digital piracy | ||
|FundamentalIssue=1. Relationship between protection (subject matter/term/scope) and supply/economic development/growth/welfare, 4. Effects of protection on industry structure (e.g. oligopolies; competition; economics of superstars; business models; technology adoption), 2. Relationship between creative process and protection - what motivates creators (e.g. attribution; control; remuneration; time allocation)?, | |FundamentalIssue=1. Relationship between protection (subject matter/term/scope) and supply/economic development/growth/welfare, 4. Effects of protection on industry structure (e.g. oligopolies; competition; economics of superstars; business models; technology adoption), 2. Relationship between creative process and protection - what motivates creators (e.g. attribution; control; remuneration; time allocation)?, | ||
+ | |EvidenceBasedPolicy=D. Licensing and Business models (collecting societies; meta data; exchanges/hubs; windowing; crossborder availability), | ||
|Discipline=D4: Market Structure and Pricing, D42: Monopoly, L1: Market Structure; Firm Strategy; and Market Performance, L12: Monopoly • Monopolization Strategies, L8: Industry Studies: Services, L82: Entertainment • Media | |Discipline=D4: Market Structure and Pricing, D42: Monopoly, L1: Market Structure; Firm Strategy; and Market Performance, L12: Monopoly • Monopolization Strategies, L8: Industry Studies: Services, L82: Entertainment • Media | ||
+ | |Intervention-Response=* Streaming music services such as the 'two-tier fremium' model can act as effective mitigation of digital piracy | ||
+ | * A successful streaming service is likely to have a monopoly or near-monopoly but the provision of different services to different consumer markets by vertically bisecting the service (into free and advertising supported and high quality advertising free subscription models) means that there is still a choice for the consumer | ||
+ | |Description of Data=Literature review | ||
+ | |Data Year=1996 to 2011 | ||
+ | |Data Type=Secondary data | ||
+ | |Data Source=IFPI (2011); | ||
|Method of Collection=Quantitative Collection Methods, Quantitative data/text mining, Qualitative Collection Methods, Case Study | |Method of Collection=Quantitative Collection Methods, Quantitative data/text mining, Qualitative Collection Methods, Case Study | ||
|Method of Analysis=Quantitative Analysis Methods, Quantitative content analysis (e.g. text or data mining) | |Method of Analysis=Quantitative Analysis Methods, Quantitative content analysis (e.g. text or data mining) | ||
|Industry=Sound recording and music publishing; | |Industry=Sound recording and music publishing; | ||
+ | |Country=European Union; USA; | ||
|Cross-country=No | |Cross-country=No | ||
|Comparative=No | |Comparative=No | ||
Line 23: | Line 32: | ||
|Literature review=No | |Literature review=No | ||
}} | }} | ||
− | |Dataset= | + | |Dataset={{Dataset |
+ | |Sample Size=1 | ||
+ | |Level of Aggregation=Individual, | ||
+ | |Data Material Year=1996 to 2011 | ||
+ | }} | ||
}} | }} |
Revision as of 15:19, 9 April 2016
Contents
Source Details
Thomes (2013) | |
Title: | An economic analysis of online streaming music services |
Author(s): | Tim Paul Thomes |
Year: | 2011 |
Citation: | Thomes, Tim Paul. An economic analysis of online streaming music services. Information Economics and Policy 25.2 (2013): 81-91. |
Link(s): | Definitive , |
Key Related Studies: | |
Discipline: | |
Linked by: |
About the Data | |
Data Description: | Literature review |
Data Type: | Secondary data |
Secondary Data Sources: | |
Data Collection Methods: | |
Data Analysis Methods: | |
Industry(ies): | |
Country(ies): | |
Cross Country Study?: | No |
Comparative Study?: | No |
Literature review?: | No |
Government or policy study?: | No |
Time Period(s) of Collection: |
|
Funder(s): |
Abstract
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.
Main Results of the Study
• This paper examines a monopolistic streaming music business model with two vertically differentiated types of services. • The low-quality service offers free access and is advertising based, while the high-quality service is fee based. • High tolerance of advertising benefits the monopolist and harms users. • Launching both types of services never leads to a socially desirable outcome. • Such a streaming music business model may be an effective means to combat digital piracy
Policy Implications as Stated By Author
- Streaming music services such as the 'two-tier fremium' model can act as effective mitigation of digital piracy
- A successful streaming service is likely to have a monopoly or near-monopoly but the provision of different services to different consumer markets by vertically bisecting the service (into free and advertising supported and high quality advertising free subscription models) means that there is still a choice for the consumer
Coverage of Study
Datasets
Sample size: | 1 |
Level of aggregation: | Individual |
Period of material under study: | 1996 to 2011 |