DP4771 Content and Advertising in the Media: Pay-TV versus Free-To-Air
|Author(s):||Martin Peitz, Tommaso Valletti|
|Publication Date:||December 2004|
|Keyword(s):||advertising, media, product differentiation, two-sided markets|
|JEL(s):||D43, L13, L82|
|Programme Areas:||Industrial Organization|
|Link to this Page:||www.cepr.org/active/publications/discussion_papers/dp.php?dpno=4771|
We compare the advertising intensity and content of programming in a market with competing media platforms. With pay-tv media platforms have two sources of revenues, advertising revenues and revenues from viewers. With free-to-air media platforms receive all revenues from advertising. We show that if viewers strongly dislike advertising, the advertising intensity is greater under free-to-air television. We also show that free-to-air television tends to provide more similar content whereas pay-tv stations differentiate their content. In addition, we compare the welfare properties of the two different schemes.