Handbook of Media Economics, vol 1A

positive externalities—then the more participation there is from both sides. Notice that

for γ < 1 the yen for ads is so strong that the number of advertisers goes beyond 1,

which can be construed as pricing ads below the marginal cost of delivering them

(say, the cost of printing the pages in a magazine). This can make sense in a two-sided

world because when ads are attractive it is possible to charge readers much more for

the media product. For example, some newspapers carry some ads for free (such as

the Hook’s classified ads in Charlottesville), and some vintage car magazines carry free

ads with the consumer footing all platform revenues.

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