|
Streaming Service
|
Regular Monthly Price
|
Regular Bundled Price
|
Student Prices
|
||
|
|
Pre 9/2017
|
9/2017-8/2018
|
Post 8/2018
|
||
|
Spotify
|
9.99
|
12.99
|
4.99
|
4.99
|
4.99
|
|
Hulu
|
7.99
|
||||
|
Showtime
|
10.99
|
|
|||
|
|
28.97
|
|
|
|
|
For college students who enjoy streaming music and movies, the
recent deal by Spotify that bundles its service with Hulu and Showtime for
$4.99 per month, is too good to pass up. It speaks volumes on two things:
1)
The elasticity of demand for these services is significantly
greater for the cash-strapped college student.
But, as a firm, when you can segment the market based on those
differences and the firm has some degree of market power, charging a lower
price to those incremental subscribers that exceeds your incremental costs is a
win for them too. Third degree price discrimination
in action.
2)
If subscribers love the services and perceive the switching costs
to be high, Spotify and its partners can extend loyalty well beyond the end of
college. A long-run benefit for sure!
No comments:
Post a Comment