Bundling Information Goods: Pricing, Profits and Efficiency

Bakos, Yannis; Brynjolfsson, Erik

doi:10.2139/ssrn.11488

Cited by 194 publications

(287 citation statements)

References 26 publications

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“…Advertising revenues are medium specific, and total advertising revenues in each case (print and online) increase proportionately with the number of subscribers of that version. We assume that the publisher is a monopolist, consistent with much of the bundling literature (e.g., Schmalensee, 1984, Bakos & Brynjolfsson, 1999. This simplification may be less egregious in the context of magazines, where each magazine's unique editorial style and content make "brand switching" less of a factor than in most other product categories, and, in our view, acceptable given our objectives (see Shugan, 2002).…”

Section: Conceptual Framework and Assumptionsmentioning

confidence: 99%

Bundling, unbundling, and pricing of multiform products: The case of magazine content

Venkatesh

Chatterjee

2006

Journal of Interactive Marketing

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The Internet has given rise to a new class of multiform (i.e., hybrid) products that can be offered in both offline and online forms, such as music and magazines. The online medium enables bundling, and unbundling, of such products at negligible cost. Focusing on a print magazine publisher, we develop an analytical model to address three questions. Under what product-market conditions should the seller offer the magazine content online? What assortment of online forms (bundle, unbundled modules, or both) is optimal? What are the pricing implications? A key result is that going online is profit enhancing even when the market strongly prefers the print medium and there are no advertising revenues. Under these circumstances, the online modules, rather than the online bundle, better complements the print bundle. Also, the wider the product line, the higher the prices of the individual products.

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Section: Conceptual Framework and Assumptionsmentioning

confidence: 99%

Bundling, unbundling, and pricing of multiform products: The case of magazine content

Venkatesh

Chatterjee

2006

Journal of Interactive Marketing

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“…Zhang et al (2015) pointed out that the increased product variety and customer demand heterogeneity requires sellers to pay more attention to the product design and pricing strategy. Bakos and Brynjolfsson (1999) and Geng et al (2005) derived the condition for the optimality of pure bundling for a large number of information goods. Hanson and Martin (1990) and Li et al (2013) considered algorithms for the pricing of mixed bundling strategy for numerous products.…”

Section: Literature Reviewmentioning

confidence: 99%

Optimal Design on Customized Bundling Strategy of Information Goods for Customers with Two-Dimensional Heterogeneity

Luo

Feng

et al. 2017

Asia Pac. J. Oper. Res.

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Asia Pac. J. Oper. Res. 2017.34. Downloaded from www.worldscientific.com by FUDAN UNIVERSITY on 04/23/17. For personal use only. X. Luo et al.to a lower or identical optimal bundle price, market penetration, and maximal profit. However, optimal bundle size shrinks or remains unchanged with increased customer heterogeneity on the total quantities of information goods with positive valuations, but it grows or stays the same when customers have larger heterogeneity on the valuations of their most favorite information goods. Our results provide explanations to the marketing practices of digital product firms, and also support the optimal decision of customized bundling of information goods for heterogeneous customers.

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“…This work is also related to the theoretical research on bundling of information goods( [12]). I have shown that pure bundling ( [13]) could be optimal in the presence of a verticallydifferentiated competitor.…”

Section: A Brief Literature Reviewmentioning

confidence: 99%