Profit-Sharing in the Closed Content Market
College of Business Administration, Seoul National University
KAIST Business School Working Paper Series No. 2006-002
Many media industries can be characterized as a "closed content market" in which only subscribers of the distribution network operator (Network Provider: NP) have access to the content provided by Content Provider (CP). In these markets, the NP frequently charges the CP for providing billing and connectivity services to potential customers. Due to this side payment, the closed content market has structural similarity to the coalitional form game. Consequently, concepts of super-additivity, the core, and the Shapley value can be applied in order to determine what amount constitutes a sustainable and fair share of the CP's profit that could be paid to the NP as a side payment. This paper addresses issues concerning the existence of the sustainable and fair profit allocation in a closed content market like the one described above.
Number of Pages in PDF File: 29
Keywords: Closed content market, Profit Sharing, Core, Shapley value
JEL Classification: C71, L82, L86working papers series
Date posted: May 2, 2006
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