Optimal price skimming by a monopolist facing rational consumers
Management Science
Adoption of Internet-Based Product Customization and Pricing Strategies
Journal of Management Information Systems
Information Goods and Vertical Differentiation
Journal of Management Information Systems
Consumer Perceptions and Willingness to Pay for Intrinsically Motivated Online Content
Journal of Management Information Systems
International Journal of Electronic Commerce
Selling or Advertising: Strategies for Providing Digital Media Online
Journal of Management Information Systems
Pricing strategies for tied digital contents and devices
Decision Support Systems
Net Neutrality and Vertical Integration of Content and Broadband Services
Journal of Management Information Systems
Vertical Differentiation and a Comparison of Online Advertising Models
Journal of Management Information Systems
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We develop an analytical model of a separating equilibrium for a two-tier fee-based and sponsorship-based information Web site. We examine the monopolist's choice of content quality and price for a fee-based site targeted at high-type consumers and the content quality level for a sponsored site offered free to all consumers. We show how a reduction in the potential for advertising revenues results in lower content quality on the free site, but permits the seller to raise the fee charged to high-type consumers. We also show how differences in consumer tolerances to ads affects content quality, banner ad volume, and usage fees. In particular, the seller can increase profits by making ads more attractive to either high- or low-type consumers, but rarely both at the same time. We show the conditions that determine which consumer segment the seller should seek to improve ad relevancy.