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The Advertising-Financed Business Model in Two-Sided Media Markets

Authors: Jullien, Bruno; Anderson, Simon P.;

The Advertising-Financed Business Model in Two-Sided Media Markets

Abstract

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.

National audience

Country
France
Subjects by Vocabulary

Microsoft Academic Graph classification: Advertising Business model Work (electrical) Key (cryptography) Canonical model Economics Market power Marketing Diversity (business)

Keywords

Ad-financed business model, Single-homing consumers, [SHS.ECO]Humanities and Social Sciences/Economics and Finance, Two-sided markets, Multi-homing consumers, Advertising congestion, Genre choice, Media see-saws, [SHS.ECO] Humanities and Social Sciences/Economics and Finance, B- ECONOMIE ET FINANCE, Competitive bottlenecks, Equilibrium platform variety

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  • citations
    This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
    25
    popularity
    This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.
    Top 10%
    influence
    This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
    Top 10%
    impulse
    This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.
    Top 10%
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citations
This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Citations provided by BIP!
popularity
This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.
BIP!Popularity provided by BIP!
influence
This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Influence provided by BIP!
impulse
This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.
BIP!Impulse provided by BIP!
25
Top 10%
Top 10%
Top 10%
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