DP10608 Competition for advertisers and for viewers in media markets
|Author(s):||Simon P Anderson, Øystein Foros, Hans Jarle Kind|
|Publication Date:||May 2015|
|Keyword(s):||genre choice, incremental ad pricing, media bias, media economics, multi-homing, overlap|
|JEL(s):||D11, D60, L13|
|Programme Areas:||Industrial Organization|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=10608|
Standard models of advertising-financed media assume consumers patronize a single media platform, precluding effective competition for advertisers. Such competition ensues if consumers multi-home. The principle of incremental pricing implies that multi-homing consumers are less valuable to platforms. Then entry of new platforms decreases ad prices, while a merger increases them, and ad-financed platforms may suffer if a public broadcaster carries ads. Platforms may bias content against multi-homing consumers, especially if consumers highly value overlapping content and/or second impressions have low value.