دانلود مقاله ISI انگلیسی شماره 22583
عنوان فارسی مقاله

استراتژی های قیمت گذاری برای محتویات دیجیتالی و دستگاه های بسته

کد مقاله سال انتشار مقاله انگلیسی ترجمه فارسی تعداد کلمات
22583 2011 8 صفحه PDF سفارش دهید محاسبه نشده
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عنوان انگلیسی
Pricing strategies for tied digital contents and devices
منبع

Publisher : Elsevier - Science Direct (الزویر - ساینس دایرکت)

Journal : Decision Support Systems, Volume 51, Issue 3, June 2011, Pages 405–412

کلمات کلیدی
قیمت گذاری - گره زدن - کتاب الکترونیکی - دستگاه های دیجیتال -
پیش نمایش مقاله
پیش نمایش مقاله استراتژی های قیمت گذاری برای محتویات دیجیتالی و دستگاه های بسته

چکیده انگلیسی

Media companies are increasingly offering digital content to consumers. Many of these companies are tying digital content with their proprietary digital devices. In this study, we develop a consumer demand model for digital device and digital content based on a constant elasticity demand function. In modeling consumer valuation of the digital device, we take consumer surplus on digital content into account. We further derive equilibrium prices for digital devices based on an oligopoly competition model with horizontal product differentiation. We analyze the equilibrium prices and how prices affect firm profits. We find product differentiation and the level of product substitutability affect prices. We also find that content price plays a significant role in affecting the price of the digital device. Content price can either increase or decrease the tied digital device price depending on the profit margin and demand elasticity of the digital content. We further analyze how content and device prices affect their respective profits and the overall profit of the firm. We extend our model to vertical product differentiation and find vertical product differentiation and the level of product quality affect prices.

مقدمه انگلیسی

Media companies are increasingly offering digital content online. Apple Computer is one of the pioneers in selling digital music at its iTunes store. Consumers can buy digital songs and videos starting at just 99 cents a piece [25]. With the high speed Internet, Apple, Netflix, TiVo and some other companies are providing videos directly to televisions at home [15] and [22]. As “the last bastion of analog”, according to Amazon's founder Jeff Bezos, books will be digitized as well [11]. The competition in digital books market has been heated. About 2 years after Amazon introduced its popular e-book reader Kindle in 2007. Barnes and Noble announced its digital book reader in 2009 [27]. In 2010, Apple introduced its competing iPad device, aiming to break Amazon's lead in the digital book market [14]. There are different ways to sell digital contents. While some companies provide “free” content with advertising on the Internet, many of the media companies are selling digital content with their proprietary formats and digital devices. For example, Apple sells digital songs in iTunes format using Advanced Audio Coding that can only be played with iPod. If consumers want to stream videos to their TVs from iTunes store, then they have to purchase Apple TV, which costs $229 [8]. Netflix has teamed up with LG to introduce its own video player that can play movies on Netflix's streaming on-demand service [22]. The e-books sold by Amazon are tied to its proprietary Kindle digital reader. Amazon sells digital versions of New York Time best sellers and new releases for $9.99 [23]. Amazon also provides some books at $0.00 for its Kindle customers. The new version of Amazon's e-book readers Kindle 2 was initially priced at $359, which was quite expensive to many customers [23]. In all of the above examples, a firm makes the sale of its product, e.g. e-books, conditional upon the purchasers also buying another product, e.g. Kindle, from the same firm. This type of business practice is called tying in economics literature [28]. While Apple's core product is iPod, many companies' main products are digital contents. Although companies can make profit through digital devices, one of the goals of tying digital contents with a proprietary device is to help sell content for those companies. In this study, we aim to address the following questions: 1) How do consumers value tied products such as digital contents that they are likely to buy repeatedly? 2) What are the factors affecting consumers' adoption of an expensive digital device? 3) What are the equilibrium prices for the digital devices? 4) How do the prices of digital contents and devices affect a firm's profit? The paper is organized as follows. We review related literature in Section 2, followed by the model setup in Section 3. In Section 4, we present our model analysis. We make an extension to the model in Section 5. We discuss our results in Section 6 and provide conclusions in Section 7.

نتیجه گیری انگلیسی

As digital content providers tie their contents with digital devices, it is unclear the framework in pricing the digital devices. While some consumers perceive the devices as expensive, there also exists quite a significant price difference between different devices. The issues on consumer valuation and acceptance of the devices, and interaction of content price and device price are not all clear. In this study, we develop a consumer demand model for digital device and digital content based on a constant elasticity demand function. In modeling consumer valuation of the digital device, we take consumer surplus on digital content into account. We further derive equilibrium prices for digital devices based on an oligopoly competition model with product differentiation. We analyze the equilibrium prices and how prices affect firm profits. We find product differentiation and the level of product substitutability affect prices. We also find that content price plays a significant role in affecting the price of the digital device. Content price can either increase or decrease the tied digital device price depending on the profit margin and demand elasticity of the digital content. In addition, we analyze how content and device prices affect their respective profits and the overall profit of the firm. Moreover, we extend the model to vertical product differentiation and find vertical product differentiation and the level of product quality affect prices. There are many interesting issues for future research. In this study, we model two competing firms move simultaneously. In the marketplace, there are incumbent and entrant. Thus, we could model the competition using a sequential game rather than a simultaneous game. Further, we could investigate whether tying enhances value for consumers and, if yes, how that changes demand functions and firm pricing strategies

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