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Pricing Strategy, Profit Sharing, and Market Structure in Digital Music Contents Industry  

Jang, Dae-Chul (한국과학기술원 테크노경영연구소)
Ahn, Byong-Hun (한국과학기술원 테크노경영대학원)
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Abstract
This paper analyze the fee structures of digital music contents and the revenue sharing ratios that are now on-going debates in Korean digital contents industry. Especially we consider Korean situation where copyrighters and telecom companies have conflict of interest. We found two major results. First, the choice between the flat rate scheme and the usage-based rate scheme is not important to telecom companies and copyrighters. The important thing is that copyrighters should decide the revenue sharing ratio and given that telecom companies should decide the retail price. Consequently, this way can lead to win-win solutions between them. Second, the flat rate scheme affects the relationship between consumers and telecom companies. Under the flat rate scheme, telecom companies have more benefits than consumers. In the vertical integrated structure, particularly, this tendency is more severe.
Keywords
Fee Structure; Digital Contents; Flat Rate; Usage-based Rate; Industry Structure;
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