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

• 成果类型: Article
• 署名作者: Li, Shengli; Luo, Qiuyue; Qiu, Liangfei; Bandyopadhyay, Subhajyoti
• 署名单位: Peking University; Xi'an Jiaotong University; State University System of Florida; University of Florida
• 刊物名称: PRODUCTION AND OPERATIONS MANAGEMENT
• ISSN/ISSBN: 1059-1478
• DOI: 10.1111/poms.13131
• 发表日期: 2020
• 页码: 688-704
• 关键词: digital music pricing models; Subscription; ad-sponsored; BUSINESS MODEL

摘要

Traditionally, consumers purchase physical music (often in the form of CDs or cassettes) from local retailers. With the development of Internet technology, the market share of digital music has grown rapidly in recent years. Unlike physical music, digital music is provided by several emerging digital music providers through the Internet to consumers. Pricing models of digital music are also drastically different from those of physical music. In this study, we identify three common schemes for selling digital music: ownership, subscription and mixed pricing models. Under the ownership model, consumers purchase and download their preferred songs and enjoy music using their local devices. Under the subscription model, music is provided through an online streaming service. The mixed pricing model is a combination of the previous two. Our paper explores and compares the three pricing models. Through a stylized model, we find that several factors, including the advertisement revenue rate and consumers' reservation value for the music service, have crucial effects on the comparison of the three pricing models.