Economics of algorithmic distribution: perception of platform power and revenue models of netflix and spotify in the streaming era in nigeria

Abstract

This paper has explored the economics of algorithmic distribution: how Netflix and Spotify are perceived to have power and how they make money in the streaming age in Nigeria. This paper aimed to explore the most common types of revenue models employed by Netflix and Spotify in Nigeria; evaluate how revenue model affects the preferences and willingness to pay of the users; and discuss how the power of the platform and consumer behaviour in the streaming age can be formed through the use of algorithmic distribution. The researcher, based on the concept of the uses and gratifications theory and the network society theory, investigates user motifs and structural power of digital platforms. To examine the topic, a quantitative survey of 384 users of streaming platforms was carried out. The major results were that Netflix and Spotify are highly popular, and subscription-based and hybrid revenue models are predominant. The quality of the content, the absence of advertising, and multiple options affect the choices of users when it comes to paying money, whereas algorithmic recommendations have a massive influence on the discovery of content and a solid position of the platform, albeit at the cost of content diversification. The paper concludes that the success of a platform depends on the combination of adaptable monetization strategies, user tastes, and algorithmic curation. Suggestions comprise making it affordable, diversification of revenue models, and personalisation versus content diversity ratios in order to maintain engagement.