THE CONCEPT OF ZERO MARGINAL COST IN THE STREAMING INDUSTRY

Joško Lozić, Katerina Fotova Čiković and Ivana Martinčević
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Joško Lozić: University North, Croatia, Republic of Croatia.
Katerina Fotova Čiković: University North, Croatia, Republic of Croatia.
Ivana Martinčević: University North, Croatia, Republic of Croatia.

UTMS Journal of Economics, 2025, vol. 16, issue 2, 223-236

Abstract: The digital transformation of production systems has precipitated a profound shift in the conceptualisation and structure of production costs. Traditional cost accounting frameworks, developed within the context of linear, industrial production processes, have become increasingly inadequate for capturing the economic realities of digitalized production systems. The objective of this paper is to critically examine the emerging paradigms of cost accounting within digitalized industries—namely, those that have transitioned from conventional linear value chains to digitally integrated models, characterized by a shift from the production of tangible goods to the generation and dissemination of digital content. This transformation necessitates a reevaluation of variable cost structures, culminating in the formulation of the zero marginal cost model.The zero marginal cost paradigm initially manifested within the media sector but has since proliferated across various industries that operate under platform-based business models. In such contexts, the marginal cost of reproducing and distributing digital content asymptotically approaches zero, thereby undercutting even the minimal marginal costs associated with traditional economies of scale. This phenomenon not only challenges the foundational assumptions of classical cost accounting but also compels a reconceptualization of economic value creation and distribution in the digital era.

Keywords: digital transformation; disruption; platform economy; scalability; zero marginal cost (search for similar items in EconPapers)
JEL-codes: D24 L86 M41 (search for similar items in EconPapers)
Date: 2025
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