DP9079 Advertising and the Distribution of Content
|Publication Date:||August 2012|
|Keyword(s):||Advertising, Broadcasting, Exclusivity, Internet|
|JEL(s):||D43, L14, L82, M37|
|Programme Areas:||Industrial Organization|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=9079|
This paper examines incentives for exclusive distribution of content in the presence of advertising. A monopoly seller of content - such as televisation rights to popular sports - may contract with one or both of two competing distributors, charging lump-sum fees. When distributors are subscription-funded, exclusive sale to a single buyer is the seller's profit-maximising choice, even when distributors also sell advertising airtime. When distributors are purely advertising-funded, however, non-exclusive contracting may instead be preferred. Advertising revenues accruing directly to the content provider may also generate a preference for non-exclusivity even when selling to subscription-funded distributors. The analysis has implications for the distribution of content to pay TV and free-to-air broadcasters, and for internet distribution of content.