INDEX
Note: Page numbers followed by f indicate figures and t indicate tables.
A
Ad revenue/subscription revenue balance, 51–55
Advertiser demand
pre-Internet, 106–107
price per media consumer, 105–106
quantity of advertising, 106
simple constant-elasticity function, 106
Waldfogel-style instruments, 107
Advertiser finance, 9–10
Advertisers, 46–47
Advertising
benefit, 123
coarse thinking, 198
congestion and limited attention, 522–524
consumer behavior, 125, 187
consumer naivety, 191–194
consumer preferences, 125
consumer rationality, 190
consumer search, 127 –143
consumer valuation, 185–186
coordination, 173–175
costs and reach, 177–178
direct product information, 126–127
disclosure costs, 178–179
economic efficiency, 126
equilibrium shadow price, 186–187
favorable quality information, 189–190
goodwill, 194–197
imperfectly competitive markets, 186
information congestion, 182–183
information transmission, 184
informative advertising, 123
informative view, 124
inframarginal consumers, 188
inframarginal valuations, 188
low-quality product, 190
media business model, 184
monopoly firm, 185
Nelson’s arguments, 166–168
post-advertising valuation, 187
pre-advertising valuation, 188–189
product (see Product advertising)
product information disclosure, 126
product’s quality, 190
profit-maximizing quality, 185–186
quantity discounts, 183
reach analysis, 188–189
repeat purchase and money burning,
171–173
social benefit, 185
spurious product differentiation, 123–124
static quality signaling, 168–170
supply-side and demand-side conditions, 197
targeted, 180–182
television, 183
welfare analysis, 183
Advertising-financed business model
advertisers, 46–47
burgeoning literature, 86
consumers, 44–46
consumer sovereignty, 42
equilibrium genre choices, 78–85
inverse-U-shaped effect, 86
media platforms, 47
multi-homing viewers, 66–78
participation externalities, 43
single-homing viewers, 47–66
specialty magazines, 43–44
usage externalities, 43
Advertising, Internet
ad revenues, 455
classified ads, 454–455, 457
content providers, 453
digital news, 450
digital video advertising, 457, 458f
display advertising, 456 – 457
Facebook, 454
Internet Service Provider, 452
mobile advertising, 457, 458f
news consumption, 453–454
news Websites, 451–452, 451t
online measurement firms, 451
performance-based ad pricing, 457, 458f
Pew Research Center, 450
search advertising, 456
spillovers, 457–459
531
Advertising, Internet (Continued)
stylized Internet media market, 452, 453f
YouTube, 454
Advertising, newspapers and magazines
determinants of rates, 426–427
multi-homing, 425–426
reader valuation, 422–425
American Online (AOL) –Time Warner
merger, 226
American Time Use Survey (ATUS), 208
Anderson and Coate model, 357–358
Anderson–Coate duopoly analysis, 67
Antitrust authorities
extension to two-sided market, 247–250
traditional approach, 244–247
Antitrust issues, newspapers and magazines
competitive behavior, 428
counter-intuitive features, 427
cross-ownership, 433
Joint Operating Agreements, 430–432
mergers, 428–430
price below marginal cost, 427
vertical price restrictions, 432–433
Archant/Independent News and Media merger, 251
Asymmetric Nash Bargaining Solution (ANBS), 307
Audience demand
advertising-supported media, 93
cable television channel bundling, 104– 105
classic discrete-choice models, 94–98
consumer utility, 105
county-level market shares, 102
demographic attributes, 93
discrete-choice models, 93
“Hausman”-style instruments, 105
“Hotelling distance” parameter, 101
identification of demand parameters, 98 –100
monopoly metro markets, 102
monopoly newspapers, 101
radio choices, 94–96, 95f
random coefficients, 103
right-hand side product characteristics, 102
single-parameter nested logit, 100–101
unobserved product characteristics, 96–98,
103–104
US local radio markets, 94, 94f
“Waldfogel” instrumental variable, 102
Walfogel-style instruments, 102–103
Audit Bureau of Circulations (ABC), 408
B
Bargaining empirics, 308
Bargaining theory, 306–308
Barnes & Noble (B&N) Website, 492
Barriers to entry, television market
horizontal merger review, 315–316
retail markets, 313–315
wholesale markets, 309–313
Behavioral targeting, 495
Belgian newspaper industry, 420
“Big Four” broadcast networks, 271
Biltmore program, 346–347
British Broadcasting Corporation (BBC),
271–273, 381
Broadcast (free) television, 270–275
Broadcast (pay) television, 284–285
BSkyB, 260
Bundling empirics, 318–319
Bundling theory, 316–318
Business stealing, 134–135
C
1992 Cable Act, 325–326
Cable overbuilders, 276
Cable programming networks, 278–280
Cable television, 276
Cablevision, 322–323
Canadian Broadcasting Corporation (CBC), 381
Canadian Radio, Television and
Telecommunications Commission
(CRTC), 384
Carlton Communications/Granada merger,
252–253
Chain broadcasting, 347
Cheap talk context, 162–163
Classic discrete-choice models, 94–98
Classified ads, 457
Combative advertising, 142–143
Comcast/NBC–Universal merger, 333
Communications Act of 1934, 345
Competitive bottlenecks, 56 –57
Consumer naivety, 191–194
Consumer preferences, 239
Consumer Price Index (CPI), 278
Consumers, 44–46
Consumer search
combative advertising, 142– 143
Diamond’s question, 128–131
532
Index
homogeneous products, 142
market-stealing externality, 142–143
price advertising and price dispersion, 131–134
product differentiation, 137– 142
random search, 142
Stigler’s question, 127–128
too much/too little advertising, 134–136
Consumer unawareness and shrouded attributes, 191
Content matching/tailoring, 494
Corporation for Public Broadcasting (CPB), 382
Cross-externalities, print media markets, 417–418
Cross-group externalities, 22–23
Cross-platform television statistics, 285–291
D
Demand elasticity effect, 322
Demand parameters identification, 98–100
Demand size effect, 322
Der Spiegel, 433–434
Designated Market Areas, 271
Digital broadcasting, 271
Digital Terrestrial Television (DTT), 284–285
Digital video advertising, 457, 458f
Digitization
consumer control over advertising exposure,
213–214
increased targeting of advertising, 215
media market outcomes, 217–218
new media business models, 215–217
Display advertising, 456–457
DoubleClick, 486
Dual source of financing, 239–240
Duopoly, 17–20
E
Economies of scale
newspapers and magazines, 413–415
radio industry, 373–375
Endogenous viewer choices, 70–71
Equilibrium genre choices
consumer satisfaction, 78
duplication principle, 79
free-entry analysis, 84–85
free-media platforms, 82
low-tier program, 79
overarching principle, 80
pay-platforms, 82
pricing game, 80
product differentiation, 78–79
quality investment, 83
revenue extraction instruments, 82–83
spatial duopoly model, 83–84
standard pricing model, 81
Steiner’s duplication principle, 79–80
subscription prices, 82
two-sided market trade-off, 83
Equilibrium media diversity, 20–21
Equilibrium product variety, 84
F
Facebook, 454
Federal Communications Commission (FCC), 345
Federal Radio Commission (FRC), 345
Fixed costs, 6, 36–38
Fixed-price version, 79–80
Free-entry analysis, 84–85
G
Generalized method of moments (GMM)
techniques, 113
German duopoly magazine markets, 419–420
Globe Democrat, 432
Google Flight Search, 482
H
Hausman instruments, 99, 105
Herfindahl–Hirschmann indices (HHI), 360–361
Heterogeneous ad-nuisance costs, 60
Heterogeneous advertisers, 74–76
Heterogeneous consumers, 34–35
Horizontally differentiated duopoly, 160
Horizontal merger review, 315–316
Hotelling-style positioning model, 32
I
Ideal point Hotelling-style model, 101
iHeartRadio, 210
Incremental pricing of ads, 68–71
Independent Television (ITV), 304
Information congestion, 76–77, 182–183
Information spreading, 491–494
Informative advertising, 123–124
Insulating tariffs, 65
Internet
click-through rates, 449
consumer choice with multi-homing, 472–481
533
Index
Internet (Continued)
content matching/tailoring, 494–524
content provision, 447
context-specific ads, 448–449
Facebook, 447
fine-tuned targeting, 446
GlobalWebIndex, 447–448
higher-quality content, 449–450
infomediaries, 447
information spreading, 491–494
ISPs, 468–470
“long tail” hypothesis, 448–449
media and advertising, 450–459
media consumption and convergence, 459–460
media platforms, 460–462
multi-homing users, 448
net neutrality, 468–470
news aggregators and selection of news, 462–466
newspapers and magazines, 433–437
search engines and media content, 466–467
search engines and search bias, 481–491
social networking, 446
tracking technology, 450
Wikipedia, 447
YouTube, 447
Internet Protocol (IP) technologies, 276–277
Internet Protocol television (IPTV) providers,
275–276
Internet service providers (ISPs), 468–470
Italian national newspaper industry, 420
J
Joint Operating Agreements (JOAs)
merger policy and regulation, 235–236
newspaper, 430–432
K
Kantar Media, 408
Keyword advertising
consumer online behavior, 511
consumer’s optimal search behavior, 507
Google AdWords, 505
non-brand keywords, 510
optimal pricing decision, 508
reservation price, 506
retailer-specific information, 509–510
search process, 506
L
Live programming, 218
Local Community Radio Act of 2010, 369
Local radio market consolidation effects
advertising market, 360–364
product differentiation and variety, 364– 369
“Low Power FM” stations, 369
M
Market failures in advertising finance, 60–61
Market size
and consumption, 32
and entry, 29
equilibrium media diversity, 20–21
and quality, 30–31
and variety, 29 –30
Market stealing effect, 140–141
Market structure, newspapers and magazines
decline of newspapers, 411–413
demographic characteristics, 409
economies of scale, 413–415
empirical research, 409
newspaper chains, 415–416
number of newspapers, 410–411
subscription prices, 409
Mass media
definition, 206
digitization, 210–211, 213–218
economic characteristics, 206
leisure activity, 208, 208f
media multitasking, 218–221
PeopleMeters, 209
print media, 207
screen proliferation, 212
second screening, 206–207
self-reports, 207
Set-Top Boxes, 209
Match advertising
constant marginal cost, 147
consumer tastes, 146
demand-driven incentives, 146–147
direct information about experience goods,
147–151
search goods and advertising content, 151–154
Media complementarities, 218–220
Media firm supply side
cost parameter estimation, 113
“Cournot” model, 111
534
Index
cross-good pricing effects, 114
degree of product variety, 114
endogenous variables and cost shifters, 109
entry models with differentiation, 116 –118
first-order conditions, 108
implicit function technique, 111
inverse advertising demand function, 110
Jeziorski model, 111
linear monopoly demand, 109
marginal cost-marginal benefit analysis, 107–108
method of moments techniques, 110
monopoly newspaper markets, 108
“multi-product” firm pricing first-order
conditions, 112
Nash equilibrium, 112, 115
newspaper markets, 114
newspaper profit, 110
operating costs, 114
per-firm revenue function, 115
price-setting game, 110
pricing decisions, 109
single-product logit demand, 108
time-shifting technologies, 118
two-sided multi-product demand equations, 111
vector of demographics, 108
welfare maximizing equilibrium, 116
Media market outcomes, 217–218
Media multitasking
competition for attention, 220–221
media complementarities, 218–220
Median voter behavior, 421
Media platforms
ad-financed business model, 461–462
advertising effect, 239
advertising-financed business model, 47
advertising revenue, 460
blogging content, 462
dual source of financing, 239–240
duplication of genres, 237–239
empirical evidence, 242–243
imperfect competition in product market, 240–241
limits on ownership concentration and media
bias, 242
matching advertising to content, 494–511
matching advertising to users, 511–524
maximum vs. minimum differentiation, 237
multi-homing consumers, 241–242
non-participating bloggers, 462
second preferences, 239
simple formal exposition, 460
Merger policy and regulation
ad-financed platforms incentives, 228
antitrust authorities, 227, 244–250
consequences, 226
diversity and differentiation incentives, 227
Hotelling model, 227
platforms’ choice of genres, 236–243
possible non-price effect, 257–258
possible price effect, 250–257
price and quantity effects, 228–236
two-sided market, 226–227
Mergers, newspapers and magazines, 428–430
“Minor” broadcast networks, 271
Minority Telecommunications Development
Program, 368
Misleading advertising
cheap talk, 162–163
imperfect enforcement of laws, 163 –164
Mixed-finance model, 17
Mobile advertising, 457, 458f
Monopoly, 16–17
Multi-homing consumers
competition for advertisers, 241–242
two-sided markets, 231–235
Multi-homing consumers, Internet
aggregate demand, 472–473
business-sharing effect, 478–479
consumer demand structure, 476, 477 f
content duplication, 480
demand configuration, 475, 475f
duopoly, 475–476
duplication effect, 478–479
equilibrium prices and profits, 476– 477
incremental pricing, 478
monopoly, 475–476
one-sided market, 472
overlapping consumers, 475
positive consumer preference correlation, 479
profits, 473
transportation parameter, 476
two-sided ad-financed media model, 473–474
welfare-optimal locations, 473
Multi-homing readers
Anderson–Coate duopoly analysis, 67
behavior of advertisers, 66
competitive bottleneck, 66
535
Index
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