Content and Advertising in the Media: Pay-Tv Versus Free-to-Air

36 Pages Posted: 15 Feb 2005

See all articles by Martin Peitz

Martin Peitz

University of Mannheim - Department of Economics

Tommaso M. Valletti

Imperial College Business School; Centre for Economic Policy Research (CEPR)

Date Written: December 2004

Abstract

We compare the advertising intensity and content of programming in a market with competing media platforms. With pay-tv, media platforms have two sources of revenues, advertising revenues and revenues from viewers. With free-to-air media, platforms receive all revenues from advertising. We show that if viewers strongly dislike advertising, the advertising intensity is greater under free-to-air television. We also show that free-to-air television tends to provide more similar content whereas pay-tv stations differentiate their content. In addition, we compare the welfare properties of the two different schemes.

Keywords: Advertising, media, product differentiation, two-sided markets

JEL Classification: D43, L13, L82

Suggested Citation

Peitz, Martin and Valletti, Tommaso M., Content and Advertising in the Media: Pay-Tv Versus Free-to-Air (December 2004). Available at SSRN: https://ssrn.com/abstract=666825

Martin Peitz

University of Mannheim - Department of Economics ( email )

D-68131 Mannheim
Germany
+49 621 181-1835 (Phone)

HOME PAGE: http://peitz.vwl.uni-mannheim.de/

Tommaso M. Valletti (Contact Author)

Imperial College Business School ( email )

South Kensington Campus
Exhibition Road
London SW7 2AZ, SW7 2AZ
United Kingdom

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
35
Abstract Views
4,320
PlumX Metrics