Full Citation
Title: Catching (Exclusive) Eyeballs: Multi-Homing and Platform Competition in the Magazine Industry
Citation Type: Miscellaneous
Publication Year: 2015
ISBN:
ISSN:
DOI:
NSFID:
PMCID:
PMID:
Abstract: Media platforms compete for both consumers and advertisers, especially when consumers divide their attention among multiple platforms. While traditional economics models assume consumers patronize a single platform ("single-homing"), I model consumer demand for multiple products ("multi-homing"), advertiser demand, and platform pricing decisions in the context of magazine markets. Using a novel data set on U.S. magazine sales at the metro level and characteristics from 2003 to 2012, and survey data that reveal consumers' order of magazine choice, I estimate the model and quantify the cross-group externalities in the magazine markets. On the reader side, I find that consumers' ad nuisance cost is approximately 5 cents per ad page-in contrast to the ad-neutrality or ad-loving findings in the print media literature. On the advertiser side, my model relates to an emerging theoretical two-sided market literature that emphasizes the importance of multi-homing. I provide the first direct evidence that media ad prices reflect advertisers' differential valuation of exclusive and shared consumers. I find that advertisers value exclusive consumers at 11 cents per eyeball, more than twice of the value of an overlapping consumer. I illustrate the importance of consumer multi-homing in a counterfactual analysis, in which demand for magazines is assumed to be as strong as in 2003. My results suggest that the rise of the Internet has caused magazines to lose proportionally more exclusive consumers than shared consumers, contributing greatly to the weakening of magazine advertising markets.
User Submitted?: No
Authors: Shi, C Matthew
Publisher: University of Virginia
Data Collections: IPUMS USA
Topics: Other
Countries: