Simon P Anderson University of Virginia Round Table Discussion Scope Modeling 2 sided media markets interactions other issues bias Multihoming Strategic variables Targeting Need to fill out the matrix ID: 329194
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Slide1
Media Economics: theory directions
Simon P. Anderson
University of Virginia
Round Table DiscussionSlide2
Scope
Modeling 2 sided media markets interactions
(other issues: bias, …)
Multi-homing
Strategic variables
Targeting
Need to fill out “the matrix”
[comments welcome on posted paper with
Foros
, Kind,
Peitz
]Slide3
Importance
Model predictions, hence policy prescriptions, are sensitive to assumptions
Merger analysis in 2SM
Laxer allowance (Bush
) on media ownership capsSlide4
Start - point
AC (RES, 2005):
monopoly bottle-neck through single-homing viewers assumption
Entry: ad levels fall, prices per viewer rise
Mergers: opposite
Public broadcaster (objectives??)Slide5
Fox News EntrySlide6
Equilibrium concept
Ads; price/ad/viewer; price per ad; more ornate tariff structure (
Weyl
-White)
Makes a big difference
How
it really happens, bargaining
Other market participants – Madison Avenue, local cable providers,
content producers …Slide7
“multi-homing” or “single-homing”
Endogenous!
Advertisers – on one or several platforms?
Viewers/ surfers / readers / listeners, ditto
[AFK: vertical/horizontal differentiation]
Difference it makes? – can depend on “strategic variable” too!
Illustration: AC vs. AR; Slide8
Distilled version of
Ambrus-Reisinger
(Anderson
Foros
Kind 2011)
r
c
common;
r
j
exclusive viewers,
Fixed number of homogenous advertisers,
wtp
b
per (unique) viewer
Then equilibrium ad pricing has multi-homing advertisers paying
b
r
j
for an ad on outlet j
Incremental Pricing Principle
[Venn diagrams]Slide9
Entry
After 3 enters, 1’s profit goes down from
b
(r
1
+r
13
)
to
b
r
1
Ad price goes down
r
1
r
2
r
3
r
12
r
13
r
123
r
2
3Slide10
Merger
Before merger, ad prices are
b
r
1
and
b
r
2
After merger, total price for putting ad on both channels is higher:
b
(r
1
+
r
c
+ r2)
r
1
r
2
rcSlide11
targeting
Matters – happens!
Reduces paying for wasted eyeballs
Better matching may increase prices; platform may want to temper this (de
Corniere
,
Bruestle
) by imperfectly serving matches
Athey
,
Calvano
,
Gans
on different degrees of targeting
Privacy concernsSlide12
Different models for different media
ACG, AFKP
TV
– timing
Mags
– can “watch” simultaneously
www intermediate
Subscription prices Slide13
Further dimensions to competition
Not just prices of ads, ad
clutter,
and subscription fees
Genre competition / program type
Quality
Variety in long run
Merger incentives / multi-channel platforms
Role of public broadcasters, non-profitsSlide14
Conclusions
Need to get it right!
Model endogenous “homing”
choice; integrative
models of heterogeneity on both sides and homing choice (AFK)
What we need from empirical studies: effects of entry, effects of mergers, on broad set of variables