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Price Structure in Two-Sided Markets: Evidence from the Magazine Industry


Wright, Julian; Kaiser, Ulrich (2006). Price Structure in Two-Sided Markets: Evidence from the Magazine Industry. International Journal of Industrial Organization:1-28.

Abstract

We present and estimate a model of competition in a two-sided market: the market for magazine readership and advertising. Using data on magazines in Germany, we find evidence that magazines have properties of two-sided markets. The results are consistent with the perception that prices for readers are ‘subsidized’ and that magazines make all their money from advertisers. Consistent with advertisers valuing readers more than readers value advertisements, our results imply that higher demand on the reader side increases ad rates, but that higher demand on the advertising side decreases cover prices.

Abstract

We present and estimate a model of competition in a two-sided market: the market for magazine readership and advertising. Using data on magazines in Germany, we find evidence that magazines have properties of two-sided markets. The results are consistent with the perception that prices for readers are ‘subsidized’ and that magazines make all their money from advertisers. Consistent with advertisers valuing readers more than readers value advertisements, our results imply that higher demand on the reader side increases ad rates, but that higher demand on the advertising side decreases cover prices.

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Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Business Administration
Dewey Decimal Classification:330 Economics
Date:2006
Deposited On:26 Jun 2012 16:15
Last Modified:05 Apr 2016 15:39
Publisher:Elsevier
ISSN:0167-7187
Publisher DOI:https://doi.org/10.1016/j.ijindorg.2005.06.002
Other Identification Number:merlin-id:3595

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