Open vs. closed Apple music distribution platform
Author(s)
Aye, Thida, S.M. Massachusetts Institute of Technology
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Alternative title
Open versus closed Apple music distribution platform
Other Contributors
Sloan School of Management.
Advisor
Charles Fine.
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In this thesis, based on the example case study of the Apple iTunes-iPods platform technology, two simple models are analyzed to gain a better understanding of open vs. closed business models as management and market strategies for multi-sided platforms. First, a simple model of a firm with a two-sided platform serving two distinct types of customers is evaluated, assuming network effects as the only intrinsic benefits to joining such a platform. Three different cases of market structure are investigated: (i) monopoly, (ii) open duopoly (iii) closed duopoly. Using game theory, comparative results of prices, profits, consumer surplus and social welfare among the three regimes are presented. The second model focuses on the effects of competition and compatibility between a profit-maximizing closed platform and an open, freely accessible platform. Given certain conditions, it is shown that compatibility can in fact be a profitable strategy for closed platforms while improving social welfare at the same time.
Description
Thesis (S.M.)--Massachusetts Institute of Technology, Sloan School of Management, 2008. Includes bibliographical references (p. 75-77).
Date issued
2008Department
Sloan School of ManagementPublisher
Massachusetts Institute of Technology
Keywords
Sloan School of Management.