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Adaptive conjoint analysis for pricing music downloads
| Venue: | Proceedings of the 30th Annual Conference of the Gesellschaft für Klassifikation e.V., Freie Universität |
| Citations: | 1 - 0 self |
BibTeX
@INPROCEEDINGS{Breidert_adaptiveconjoint,
author = {Christoph Breidert and Michael Hahsler},
title = {Adaptive conjoint analysis for pricing music downloads},
booktitle = {Proceedings of the 30th Annual Conference of the Gesellschaft für Klassifikation e.V., Freie Universität},
year = {},
pages = {8--10}
}
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Abstract
Abstract. Finding the right pricing for music downloads is of ample importance to the recording industry and music download service providers. For the recently introduced music downloads, reference prices are still developing and to find a revenue maximizing pricing scheme is a challenging task. The most commonly used approach is to employ linear pricing (e.g., iTunes, musicload). Lately, subscription models have emerged, offering their customers unlimited access to streaming music for a monthly fee (e.g., Napster, RealNetworks). However, other pricing strategies could also be used, such as quantity rebates starting at certain download volumes. Research has been done in this field and Buxmann et al. (2005) have shown that price cuts can improve revenue. In this paper we apply different approaches to estimate consumer’s willingness to pay (WTP) for music downloads and compare our findings with the pricing strategies currently used in the market. To make informed decisions about pricing, knowledge about the consumer’s WTP is essential. Three approaches based on adaptive conjoint analysis to estimate the WTP for bundles of music downloads are compared. Two of the approaches are based on a status-quo product (at market price and alternatively at an individually self-stated price), the third approach uses a linear model assuming a fixed utility per title. All three methods seem to be robust and deliver reasonable estimations of the respondent’s WTPs. However, all but the linear model need an externally set price for the status-quo product which can introduce a bias. 1
Keyphrases
music downloads adaptive conjoint analysis status-quo product pricing strategy linear model reference price reasonable estimation different approach consumer willingness third approach self-stated price recording industry linear pricing certain download volume consumer wtp subscription model music download service provider right pricing price cut used approach informed decision market price respondent wtps customer unlimited access challenging task fixed utility pricing scheme ample importance monthly fee
