We develop an economic and operational model to examine the conditions for the viable provision of content distribution services by a monopolistic firm. Each user firm (the content provider or CP) has the option of buying content distribution services from the content distribution service provider (CDP) or going on its own to arrange for its content to be distributed at a set of chosen sites operated by Internet Service Providers (ISPs). The CDP enjoys operational benefits in terms of both the fixed and variable cost of replicating content. However, we find that for certain market situations (concentrated CP and ISP demand), not all CPs will find it attractive to buy services from the CDP. The best case for the CDP is when the various content providers have similar demand that is uniformly distributed across ISP sites.
Kaya, Cuneyd; Dogan, Kutsal; and Mookerjee, Vijay, "An Economic and Operational Analysis of the Market for Content Distribution Services" (2003). ICIS 2003 Proceedings. 73.