Optimal Pricing Model of Digital Music: Subscription, Ownership or Mixed?

Li, Shengli; Luo, Qiuyue; Qiu, Liangfei; Bandyopadhyay, Subhajyoti

doi:10.1111/poms.13131

Cited by 50 publications

(22 citation statements)

References 48 publications

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“…The impacts of product digitalization on a firm's operations and marketing decisions have been studied in the literature (see, e.g., Li et al., 2020; Tan & Carrillo, 2017). Corollary 1 demonstrates that product digitalization in the context of channel decentralization has a profound impact on a firm's bundling decisions as well.…”

Section: Analysis Of Manufacturer's Bundling Decisionmentioning

confidence: 99%

“…Compared to physical goods, they possess unique features such as negligible marginal production/delivery cost, unlimited capacity, and high sunk cost (e.g., R&D cost). To understand the interplay between digital goods bundling and channel decentralization, we focus on the case of zero marginal production cost, following the tradition of the literature on digital goods (e.g., Li et al., 2020; Tan & Carrillo, 2017) and on product bundling (e.g., Bhargava, 2012). Our analysis reveals that channel decentralization is most likely to lead to manufacturer bundling when the marginal production cost is zero.…”

Section: Introductionmentioning

confidence: 99%

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Impact of channel structure on a manufacturer's bundling decision with an application to digital goods

Cao

Geng

Zhang

2022

Production and Operations Management

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This paper studies the impact of channel structure on an upstream manufacturer's bundling incentive, with a focus on the implications of channel structure for bundling digital goods. We consider a distribution channel with a manufacturer and a retailer. The manufacturer produces two products and sells them either separately or in the form of bundles to end consumers through a downstream retailer. Our analysis reveals that a manufacturer may have a stronger incentive to bundle when selling through a downstream retailer than when selling directly to consumers. Bundling serves as a tool for the manufacturer to reduce the harm associated with the well-documented double marginalization problem. Therefore, our paper provides a new rationale to the bundling literature, which has traditionally focused on the role of bundling in helping a firm price-discriminate consumers or gain competitive advantages against peer firms. Further, contrary to the conventional wisdom that asymmetries in bundled products hurt a firm's bundling incentive, we show that asymmetries can strengthen the manufacturer's incentive to bundle in a distribution channel. We also find that, as the marginal production costs decrease, a decentralized channel structure is more likely to lead to manufacturer bundling than a centralized one. Our results help explain the prevalence of bundling, especially digital products, in practice.

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Section: Analysis Of Manufacturer's Bundling Decisionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Impact of channel structure on a manufacturer's bundling decision with an application to digital goods

Cao

Geng

Zhang

2022

Production and Operations Management

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“…Some scholars used the empirical research method [13][14][15]; others used model research method to analyze the impact of positive cross-network externality on the competition of platform enterprises [16,17]. Li et al compared and analyzed three online music pricing strategies of ownership, subscription, and mixed pricing by optimizing the model, and the results showed that positive cross-network externalities and consumers' reserve price for music services had key influences on the pricing strategies of music platforms [18]. Scholars who study video media platform assume that advertising will cause interference to the audience and explore the impact of negative cross-network externality on platform pricing or advertising strategy [1,19,20].…”

Section: Literature Reviewmentioning

confidence: 99%

Research on the Revenue Management of Network Video Platform Based on Game Theory

2022

Mathematical Problems in Engineering

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To study how the network video platform can improve revenue and optimize the revenue structure, we construct an asymmetric competition model between free and paid platforms based on game theory, and the impact of the positive and negative cross-network externalities and program differentiation on platform’s competition and revenue are analyzed. The results show that changes in the relative relationship of positive and negative cross-network externalities may lead to free platform exiting the consumer market or paid platform exiting the advertising market. Only when the ratio of positive and negative cross-network externalities is moderate, the free and paid platform coexist, and the greater the difference of program, the greater the possibility of coexistence. With the effect of the positive and negative cross-networks externalities, the multi-revenue structure of the payment mode is not always better than the single revenue structure of the free platform. In addition, the impact of the positive and negative cross-network externalities and program differentiation on the revenue of free and paid platforms are nonlinear. If the platform wants to achieve greater revenue through the adjustment of revenue structure, it should fully consider the relative relationship of positive and negative cross-network externalities and program differentiation, otherwise it may bring losses.

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“…Young people, especially students, have emerged as the primary consumers, and digital music has emerged as one of their preferred forms of consumer material [1,2]. When users want speci c music, they can easily search for it by entering information like title or artist, but when they do not have a clear query, that is, when they want the music system to give them music that meets their preferences without a clear goal, personalized music recommendation can be a better solution [3,4].…”

Section: Introductionmentioning

confidence: 99%

AI-Based Music Recommendation Algorithm under Heterogeneous Network Platform

Wang

2022

Mobile Information Systems

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Music service is one of the diversified network services offered by people in the Internet era. Various music websites provide many tracks to meet people’s music needs. Hundreds of millions of music of various genres at home and abroad, and there is a severe problem of information asymmetry between users and music. As a branch of the information filtering system, the recommendation system can predict users’ preferences, increase flow, and drive consumption. A personalized music recommendation system can effectively provide people with a list of favorite tracks. Recently, many researchers have paid attention to heterogeneous networks because of their rich semantics information. Research has confirmed that rich relationship information in heterogeneous networks can improve the recommendation effect. Therefore, under the platform of a heterogeneous network, this paper divides the digraph set of track characteristics into several clusters with maximum heterogeneity, which makes the digraph of track characteristics in each cluster isomorphic to the maximum extent. When matching similarity, only searching in the cluster with the highest similarity to the target user can match a sufficient amount of applicable tracks, thus improving the efficiency of music recommendations to users. Experimental results show that the proposed algorithm has a high recall, precision, and F1 and can recommend personalized track lists to users to meet their music needs.

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Optimal Pricing Model of Digital Music: Subscription, Ownership or Mixed?

Cited by 50 publications

References 48 publications

Impact of channel structure on a manufacturer's bundling decision with an application to digital goods

Impact of channel structure on a manufacturer's bundling decision with an application to digital goods

Research on the Revenue Management of Network Video Platform Based on Game Theory

AI-Based Music Recommendation Algorithm under Heterogeneous Network Platform

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