• ISSN: 2010-023X
    • Frequency: Bimonthly
    • DOI: 10.18178/IJTEF
    • Editor-in-Chief: Prof.Tung-Zong (Donald) Chang
    • Executive Editor: Ms. Cherry L. Chen
    • Abstracting/ Indexing: Engineering & Technology Digital Library, ProQuest, Crossref, Electronic Journals Library, DOAJ , EBSCO, and Ulrich's Periodicals Directory
    • E-mail: ijtef@ejournal.net
IJTEF 2015 Vol.6(2): 117-124 ISSN: 2010-023X
DOI: 10.7763/IJTEF.2015.V6.454

A Brand Premium Pricing Model for Digital Music Market

Tobey H. Ko and Henry Y. K. Lau
Abstract—This paper proposes an alternative pricing scheme for the digital music market, where the musician's differentiated characteristics such as fame, popularity, and listener share — in the form of consumer's brand premium multiplier — is incorporated into the pricing decision by the record label. We consider consumers are differentiated by two types of characteristics: the brand premium multiplier towards the musician, and the general preference to music. We argue that in the co-existence of free music streaming, the retail price of a musical product should be allowed to vary in a manner that reflects the differences in market environment and the musician's characteristics. The results of the proposed model provide a toolkit for the recording industry to effectively price its products in a market that is constantly evolving.

Index Terms—Brand premium, music streaming, pricing, self-selection.

The authors are with the Department of Industrial and Manufacturing Systems Engineering, The University of Hong Kong, Pokfulam, Hong Kong (e-mail: magicfor@hku.hk, hyklau@hku.hk).

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Cite: Tobey H. Ko and Henry Y. K. Lau, "A Brand Premium Pricing Model for Digital Music Market," International Journal of Trade, Economics and Finance vol.6, no.2, pp. 117-124, 2015.

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