Multi-Sided Platforms and Multi-Homing Consumers: The Online Advertisement Case

Traditional advertisement models assume that consumers subscribe to only one platform at the time and that advertisers instead are present everywhere (they multi-home). However, we know internet consumers visit many websites per day, sometimes even at the same time and indeed the recent literature has changed this set-up. Here I assume that consumers are interested in the content offered on the media platforms and that for this reason they might choose to subscribe to all websites as well. I study what are the optimal strategies of two competing multi-sided media platform in this situation and prove that it is not always optimal to subsidize consumers: when consumers already value multi-homing because of the complementarity between platforms and in turns advertisers do not value multi-homing consumers as much as single-homing consumers, platforms can successfully charge positive prices to both sides of the market.