Pricing Online Magazines under Constraints in Platform Deployment 30/06/11

This paper analyses the economic issues raised by the emergence of a potentially disruptive innovative support such as Reading Tablets on Press Magazine’s market. Different studies have shown that the impact of digitalization is eventually stronger when coupled with a technological innovation on the support side. Moving from this set up, we will analyse the possible pricing strategies for digital magazines, considering the peculiarities of these good in terms of copyright issues, cost structure and distribution system. A switch from a “paper press model ” to an “hybrid digital press model ” may generate highly positive externalities of the kind often referred to as “network effects”. Moreover, new market opportunities may emerge for media brands (publishers and distributors) in terms of bundling and differentiating contents. But what would be the role of media brands in the digital market? What would be the relative market power of economic agents along the value chain? Finally, what would be the optimal pricing and strategy to “go digital”? Drawing on data from French press magazine market, we will tackle these questions developing a model that takes in account both the bargaining issues along the value chain and the cross-externalities on the roll-out of reading tablets