Dynamic Bundling of Goods and Bads in Media Markets

Abstract

We develop a framework to study dynamic media consumption decisions and their tensions with the interests of advertiser-supported media. The model captures the core characteristics of how commercial media markets operate and audiences form. Media trade utility-raising goods (programs, information, and services) with audiences in exchange for utility-decreasing bads (exposure to advertisements), and goods are otherwise free to the audience except for their opportunity cost of time. Goods and bads are dynamically arranged, and as such traded in an intertemporal bundle. No monetary transfers take place between media and audiences, and this barter exchange is not contractually sustained.