Discussion 2 （0917）——Group3

-Supply and demand curves

Membership Pricing Strategy of IQIYI（IQIYI is an online video website and video playback platform）

According to the theory of supply and demand, the price and output of a commodity are determined by the relative scarcity of supply and demand. In a competitive market, changes in supply and demand affect the price and output of a commodity, as evidenced by the following: when supply is less than demand, prices rise; when supply is greater than demand, prices fall.

Below is an analysis of the pricing of the cost of an Edgewood membership from both the supply and demand side:

Demand side:

Content attraction: IQIYI has rich content resources such as film and television, variety shows, etc. If the platform provides exclusive, high-quality popular content, such as explosive dramas, popular variety shows, etc., it will attract a large number of users, and the user demand for membership will increase. At this time, even if the pricing of membership fees is high, there will still be many users willing to buy membership to access these high-quality content. For example, during the broadcast of phenomenal explosive dramas such as ‘Berserk’, the demand for membership in IQIYI may increase dramatically, and the discourse on the pricing of membership fees is relatively strong.

User experience: In addition to content, a good viewing experience (e.g., high-definition picture quality, no advertisement interference, etc.) can also boost users' demand for membership. Users are more willing to pay for the membership if they have higher requirements for the viewing experience and believe that the IQIYI membership can provide a better experience. For example, some users choose to buy an IQIYI Gold membership or a higher-level membership in order to be able to skip ads and enjoy high-definition picture quality, and these membership types correspond to different features and prices to satisfy different users' needs for experience and willingness to pay.

Supply side:

Content cost: IQIYI needs to invest a lot of money in producing and purchasing content. In order to obtain high-quality film and television resources, produce original content, etc., Aikiye has to bear high costs. These costs affect the pricing of membership fees. If the cost of content rises, in order to ensure profitability or cover costs, IQIYI may increase membership fees. For example, IQIYI invests heavily in content every year, and content costs alone may account for a higher percentage of revenue costs, which may prompt it to balance its income and expenditure by adjusting membership prices.

Technology investment and service enhancement: Continuously upgrading the technical level of the platform, such as optimizing video playback technology and providing more stable servers, as well as improving the quality of customer service, requires investment in capital and resources. These investments will also have an impact on the pricing of membership fees. If IQIYI invests more in technology and services, it may increase its membership prices to a certain extent in order to recover costs and achieve profitability.

-Freemium

Baidu NetDisk

1.Market demand and user base Massive storage requirements: With the rapid growth of the amount of data generated by Internet users in China, especially the demand for transmission and storage of large files (such as photos, videos, game files, etc.), users need a convenient and secure cloud storage service to save and share their data. 

2.Balance of free and paid models 

Free storage to attract users: Baidu NetDisk initially provided a lot of free storage space to attract users, this model helped Baidu Web disk quickly acquire a large number of users in the early days. Although Baidu has gradually reduced the free storage space since then, it has established user habits and attracted many long-term users with a low barrier to entry. 

3.Premium Membership Services

Baidu NetDisk offers paid membership services that allow users to get faster download speeds and more storage space. This "value-added service" model balances the demand for free users with the profitability of the platform, and also brings a stable revenue source for Baidu's online disk. 

4.Multi-platform compatibility

Baidu NetDisk supports multiple operating systems (such as Windows, macOS, iOS, Android, etc.), and data storage and sharing through various ways such as web side and mobile side. This flexibility greatly improves the user's convenience.