Cooperative Pricing in Digital Value Chains - The Case of Online Music

Peter Buxmann, Jochen Strube and Gerrit Pohl

Publications of Darmstadt Technical University, Institute for Business Studies (BWL) from Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL)

Abstract: In this paper we examine alternative pricing models for digital music from the perspective of the entire music value chain. By analyzing empirical data on the willingness to pay, we show that the turnover from music downloads could be increased by lower prices. However, such a low price strategy can only be realized if the actors of the value chain, i.e. artists, labels, collecting societies, service providers, and online shops act as cooperation partners. We develop a model to find profit-maximizing prices and show how to split up the resulting increasing revenues between the partners of the value chain to assure Pareto-efficient solutions.

Date: 2007-02
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Published in Journal of Electronic Commerce Research 1 (2007-02) : pp. 32-40

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Persistent link: https://EconPapers.repec.org/RePEc:dar:wpaper:36556

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