Optimizing a Menu of Multi-format Subscription Plans for Ad-Supported Media Platforms

Media content distribution has changed extensively in the past decade. Content, which was once distributed through traditional formats such as television, radio and print, is now available through contemporary digital formats with many possible versions, such as smartphone and tablet apps, and presence or absence of ads. Consequently, many media firms facing markets comprised of heterogeneous consumers with varying content consumption preferences are offering ‘menus’ of multi format-version subscription bundles for their consumers to choose from. Yet, little systematic model-based guidance exists for configuring and pricing menu options. Moreover, most media firms are ‘audience-building platforms’ that serve at least two distinct customer groups (content consumers and advertisers) with inter-related demands. Therefore, constructing a menu of content subscription bundles that maximizes total profit from both consumers and advertisers is a formidable challenge. This research proposes a theory-driven implementable model-based approach that can aid media platforms in addressing this challenge. The proposed approach is demonstrated for a U.S. newspaper and insights into profit maximizing menus under various business model and format strategies are provided.