Posted by: Costas Troulos | April 21, 2008

Revenue Sharing (cont’d)

I was browsing through a pile of news and blog posts when i stumbled upon “Copyright debate walks the plank” article by Steve Mullins on telecoms.com.

Steve starts from the decision taken by European Commission to not favor customer disconnection by ISPs, if alleged for digital piracy to argue that content owners ought to collaborate with ISPs […]. He concludes the article with the following example:

Danish carrier TDC announced a new service last month offering unlimited access to music downloads to both mobile and broadband customers after doing deals with 30 labels, including three of the majors. Both parties stand to benefit, with the music companies getting paid for the use of their libraries by the telco, while TDC bolsters its communications and broadband services with attractive content that might just stop customers churning away to rivals’ offerings.

Although, this particular example presents a partnership case with limited business scope between a number of content providers and an access provider, it clearly indicates that there are a lot of possibilities for collaboration amongst content and access providers without the need to vertically integrate (a strategy that most likely will result in reduced social welfare in the long-term).

With revenue sharing (in any type of realization) providers of digital content can gain immense competitive advantage (distribution, awareness etc.) over broadband infrastructures while access providers can enhance their profitability and increase the attractiveness of their offerings to the end-customers.


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