An analysis of three pricing strategies for digital music products

Jingxian Chen, Liang Liang, Samar Mukhopadhyay and Dong-qing Yao

Journal of the Operational Research Society, 2022, vol. 73, issue 12, 2717-2731

Abstract: Digital music albums can be sold either as singles or as a full album, which is not an option for selling physical music products. This paper investigates three pricing strategies for selling digital music albums. The first (strategy S) sets a unified unit price and all songs are sold at this price. The second (strategy F) determines a bundling price for selling the whole album. The third (strategy M) mixes strategies S and F. It offers two prices: one is for a unit song and the other for the whole album. We develop mathematical models for this problem and design enumeration-based iteration algorithms to solve these models for optimality. Through a database consisting of 243 groups of numerical results, we establish a decision tree model, a popular data mining technique, to explain which strategy should be employed under various conditions.

Date: 2022
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DOI: 10.1080/01605682.2021.2015255

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