The Study On Pricing Modes Of Online Music Platform From The Perspective Of Two-sided Market Theory

The online music industry has weak profitability. The platform enterprises hope tofind out the optimal pricing model and improve the profit level. This paper focuses onsolving this problem from the perspective of two-sided market theory.The online music industry has many participants, including music contentproviders, music service providers(Platform Enterprises), music users, advertisers,telecommuter operators, payment service providers and so on. Firstly, we study theonline music industry deeply to find out the interaction among the main participants.Then we identify the inherent characteristics in online music market based on two-sidedmarket theory. Secondly, this paper focuses on the pricing modes when online musicplatform enterprises get profit from the users, the advertisers, or both them. We find thatthe optimal mode is associated with the cross-group network externalities and the musicquality. The platforms get profit from advertisers when cross-group networkexternalities work. And it can also get profit from the users when music quality is high.So the platforms choose the optimal pricing mode according the different situations.Finally, we verify the conclusion from the study of KUWO. We find that KUWOfits perfectly the conclusion above. Then we give KUWO some suggestions forimproving the profit.