Jullien, Bruno and Anderson, Simon P. (2015) The advertising-financed business model in two-sided media markets. In: Handbook of Media Economics Anderson, Simon P., Strömberg, David and Waldfogel, Joel (eds.) Elsevier. Chapter 2. pp. 41-90. ISBN 9780444636959

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Identification Number : 10.1016/B978-0-444-62721-6.00002-0


This chapter focuses on the economic mechanisms at work in recent models of advertising finance in media markets developed around the concept of two-sided markets. The objective is to highlight new and original insights from this approach, and to clarify the conceptual aspects. The chapter first develops a canonical model of two-sided markets for advertising, where platforms deliver content to consumers and resell their “attention” to advertisers. A key distinction is drawn between free media and pay media, where the former result from the combination of valuable consumer attention and low ad-nuisance cost. The first part discusses various conceptual issues such as equilibrium concepts and the nature of inefficiencies in advertising markets, and concrete issues such as congestion and second-degree discrimination. The second part is devoted to recent contributions on issues arising when consumers patronize multiple platforms. In this case, platforms can only charge incremental values to advertisers, which reduce their market power and affect their price strategies and advertising levels. The last part discusses the implications of the two-sided nature of the media markets for the choice of content and diversity.

Item Type: Book Section
Language: English
Date: 2015
Uncontrolled Keywords: Two-sided markets, Ad-financed business model, Single-homing consumers, Competitive bottlenecks, Multi-homing consumers, Media see-saws, Advertising congestion, Genre choice, Equilibrium platform variety
Divisions: TSE-R (Toulouse)
Site: UT1
Date Deposited: 12 Jun 2020 10:22
Last Modified: 27 Oct 2021 13:38
OAI Identifier: oai:tse-fr.eu:124366
URI: https://publications.ut-capitole.fr/id/eprint/35045
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