Deriving Value in Digital Media Networks

This paper presents a framework for the analyzing revenue distribution in the delivery of digital content such as music, movies, games, books, and news. In such content delivery networks, there are various roles played by producers, consumers, syndicators, aggregators and distributors in the marketplace. We outline a framework for business modeling known as VISOR and adapt some ideas from game theory in order to investigate notions of efficiency and fairness in the digital media eco-system. This framework suggests that the revenue distribution within a business model is determined by the range between producers’ cost of production and consumers’ willingness to pay. The allocation of these revenues among the players is in turn determined by their value capacity which is a function of the interface for content, service platform, organizing model and revenue streams. The game-theoretic notions of fairness and efficiency are introduced as a strategy for stability in the workplace. The paper concludes that stability is the key to derivative value in a digital media network.