Business Structure of e-Book Service as a Product Service System: A Game Theoretic Approach

Abstract

The study demonstrates a theoretic mechanism of e-book business using game theory. Recently, the e-book business has spread. Many e-book titles are now readily available through smart phones or dedicated devices. The e-book business incorporates aspects of service and products into one system, which can be regarded as a product service system. Thereby, stakeholders of various kinds are intertwined. Designing an appropriate product service system requires elucidation of its theoretic mechanism. Against this background, we first investigated the book industry in Japan and categorized its business structures into four cases: (1) paper-made books, (2) CD-ROM books, (3) multidevice-readable e-books, and (4) cellphone-readable e-books. Then e-book service models of four kinds were constructed, including several players such as publishers, device manufacturers, e-book stores, telecommunication firms, and consumers. Results show that, in a theoretical equilibrium, consumers are separable into two segments: consumers purchasing all e-books and consumers with no purchase. Its border is determined by conditions of production cost, commission of e-book sales, the number of available e-books, etc. Results of our study can contribute to clarification of the fundamental mechanisms underlying the e-book business.