Pricing of Media and Information
The chapter deals with how firms organize and manage the pricing of media and information products. Pricing strategies vary, and include those based on cost, those that are market-based and may vary by peak-load, and those based on value. To determine the willingness to pay one may use techniques of econometric estimation and hedonic prices. Key strategies are keeping pricing above cost to reduce consumer surplus. Legal constraints exist for price fixing, resale price maintenance, price discrimination, and predatory pricing. Technology enables an individualization of pricing, and rapid variations are possible. But it also leads to the spread of “free” alternatives. A major theme of the case discussion centers on the struggles of Encyclopedia Britannica to deal with the free online models.