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The Welfare Effects of Spotify’s Cross-Country Price Discrimination

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Listed:
  • Joel Waldfogel

    (University of Minnesota
    NBER
    ZEW
    CESIfo)

Abstract

We calibrate a simple empirical logit model of world demand—and subscription pricing—at Spotify, with the use of available data on monthly prices and using streaming volumes by country to create measures of the numbers of users. We find that country-specific pricing increases revenue by 5.9% relative to uniform world pricing, while country specific pricing decreases world consumer surplus by 1.0%. Country-specific pricing within Europe increases revenue in Europe by 1.1%, and EU consumer surplus increases by 0.3% with country-specific pricing. Consumers in lower-income countries gain more from price discrimination than do the consumers in higher-income countries.

Suggested Citation

  • Joel Waldfogel, 2020. "The Welfare Effects of Spotify’s Cross-Country Price Discrimination," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 56(4), pages 593-613, June.
    • Handle: RePEc:kap:revind:v:56:y:2020:i:4:d:10.1007_s11151-020-09748-0
    DOI: 10.1007/s11151-020-09748-0
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    References listed on IDEAS

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    1. Lichtenberg Frank R., 2010. "Pharmaceutical Price Discrimination and Social Welfare," Capitalism and Society, De Gruyter, vol. 5(1), pages 1-32, July.
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    6. Ben Shiller & Joel Waldfogel, 2011. "Music for a Song: An Empirical Look at Uniform Pricing and Its Alternatives," Journal of Industrial Economics, Wiley Blackwell, vol. 59(4), pages 630-660, December.
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    Cited by:

    1. Bertschek, Irene & Bonin, Holger & Janßen, Rebecca & Wenzel, Tobias, 2021. "Einsatz datengetriebener Produkt- und Preisdifferenzierungen und Folgen für den Sozialstaat," IZA Research Reports 118, Institute of Labor Economics (IZA).
    2. Jeremy Watson & Megan MacGarvie & John McKeon, 2023. "It Was 50 Years Ago Today: Recording Copyright Term and the Supply of Music," Management Science, INFORMS, vol. 69(1), pages 351-376, January.

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    More about this item

    Keywords

    Platforms; Price discrimination; Recorded music; Streaming;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media

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