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Poaching in media: Harm to subscribers?

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  • Elias Carroni

Abstract

Two media platforms compete for heterogeneous users bothered by commercials and sell advertising spaces to firms. In a two‐period model, media are allowed to condition subscription prices on the past behavior of users. Within‐group price discrimination intensifies media competition on the firms' side, as some firms advertise only on one media outlet (single‐home), where they can meet early users and switchers. As a consequence, advertising revenues are reduced and this puts an upward pressure on subscription prices. However, price discrimination also induces stronger within‐group competition to poach the rival's users. Depending on the balance between these two forces, conditioning subscription prices on past behavior might be beneficial or detrimental to users, whereas it is always detrimental to platforms. In relation to within‐group uniform pricing, total welfare might increase or decrease, as the lower advertising intensity may entail either underprovision or a mitigation of overprovision of advertisements.

Suggested Citation

  • Elias Carroni, 2018. "Poaching in media: Harm to subscribers?," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 27(2), pages 221-236, June.
    • Handle: RePEc:bla:jemstr:v:27:y:2018:i:2:p:221-236
    DOI: 10.1111/jems.12238
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    References listed on IDEAS

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    3. E. Carroni & D. Paolini, 2019. "The business model of a streaming platform," Working Paper CRENoS 201902, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
    4. Carroni, Elias & Paolini, Dimitri, 2020. "Business models for streaming platforms: Content acquisition, advertising and users," Information Economics and Policy, Elsevier, vol. 52(C).

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