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http://hdl.handle.net/10419/48156
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| Title: | | An economic analysis of online streaming. How the music industry can generate revenues from cloud computing  |
| Authors: | | Thomes, Tim Paul |
| Issue Date: | | 2011 |
| Series/Report no.: | | ZEW Discussion Papers 11-039 |
| Abstract: | | This paper investigates the upcoming business model of online streaming services allowing music consumers either to subscribe to a service which provides free-of-charge access to streaming music and which is funded by advertising, or to pay a monthly flat fee in order to get ad-free access to the content of the service accompanied with additional benefits. By imposing a two-sided market model on the one hand combined with a direct transaction between the streaming service and its flat-rate subscribers on the other hand, the investigation shows that it can be highly profitable to launch a business which is free-of-charge for subscribers if advertising imposes a weak nuisance to music consumers. If this is the case, and by imposing an endogenously determined level of advertising which is provided by homogeneous advertisers, we find that a monopolistic streaming service increases the price for its flat-rate subscribers in order to stimulate free-of-charge demand and to capture higher revenues from advertisers. An extension of the model by illegal file-sharing shows that an increase in copyright enforcement shifts rents from music consumers to the monopolist. |
| Subjects: | | Advertising media Music industry Online streaming Piracy |
| JEL: | | D42 L12 L82 |
| Persistent Identifier of the first edition: | | urn:nbn:de:bsz:180-madoc-31908 |
| more recent Version: | | http://hdl.handle.net/10419/48872 |
| Document Type: | | Working Paper |
| Appears in Collections: | | Publikationen von Forscherinnen und Forschern des ZEW ZEW Discussion Papers
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