Background Trend of Premium Membership
For brands, membership has always been a way to maintain customer relationships and further build brand communities. A sense of membership (SOM) is also defined as a represents of the sense of belonging (Luo, 2015). The concept is broadly used to illustrate how individuals appraisal themself with a group, and how people evaluate themselves as members of different communities. In the goal to build a deep connection between customer and brand, marketers find that membership coincides with the direct method to build a brand community, which they are trying to create in brand equity. As a result, membership strongly links to the need of belonging and being recognized by the brand.
Luo (2015) claimed that although SOM was originally defined in brick-and-mortar communities, various scholars believe that it can also apply to online virtual communities.
The advent of the Internet has greatly improved the efficiency of the membership system.
The war is not a plastic card in a physical store anymore, it has already extended from the real world to online communities. Thus, an online community becomes another filed for brands to build a connection with consumers. A virtual community becomes a neoteric form of social entity in which members seeking problem-solving and share information for mutual learning through the Internet (Luo, 2015). For a broadly experience example in our daily life, is is remarkablethat the trend of membership has already diffused from traditional retail stores to E-commerce applications. Sundry ® memberships burst out in Taiwan during 2019. Being taken as the most popular way to connect consumers, no matter retail, technology, entertainment or sports business launched their membership policies.
Under these circumstances, consumers’ decision making of membership charge payment becomes an important consideration for a marketer. But before that, what is the difference between a free membership and a membership needed to pay a fee?
Premium membership, as an upgraded concept of membership, has kept booming in recent years. It is specific mention the payment that form in a limited membership charge.
As technology advance, base on the development of 5G and cloud services, the paid-up membership, also known as premium membership, has become another very successful type of payment. For example, Microsoft and Adobe have turned their software selling method into a premium membership chargeinstead of the former buyout system. The
service should offer a more stable way that both company and customers benefit in blocking piracy activities and software update matters. Premium membership does not mean that the member can get premium service, it is a different payment term which Thaler (1999) illustrated with telecommunications and health club examples : generally speaking, consumers don't like having the meter running, known as“the rate bias in telecommunications”. As Train (1991) says, most telephone customers select a fixed payment for a period’s service even though paying by the call would cost them less. Thaler (1999) says, similarly, rather thanpaying by times, health clubs typically charge members by the month or year. The point of this strategy is making the marginal cost of a visit close to zero. This payment method can be really attractive to those who feel they should exercise more but usually fail to so. Owing to build a rule for themself, a period’s payment becomes a self-control tool that has the incentive to decrease the lost feeling of the fee, as a sunk cost, which can be depreciated by using the service (Thale, 1999). Extend on such a concept, some retail, software, and streaming company launched their premium membership in recent years. As a pioneer of premium membership, Amazon started Prime service from 2005, which was quoted as “ one of the most bizarre good business ideas ever ” by WIRED. There are several reasons for the success of this kind of premium membership. First, it promises special and usually unlimited services for a certain period of time with a fixed fee. Moreover, as a new concept of payment, , brands tried their best to propose the most cost-effective services to attract consumers to buy paid-up membership with the goal to catch as much as customers and thus create a new industry-standard. In fact, we have also verified the effectiveness of this payment from the success of Amazon and NetFlix for instance.
In view of the fact that paid-up membership has only just been developed for a few years, we are currently seeing payment divided by the term of the period length that guaranteed the service. In Taiwan, the most common payment methods are monthly payments and annual payments, as in the case of telecommunications companies and gyms.
Therefore, the trade-off between these two payments becomes the focus of our research in this study.
Trend of Streaming
Since its introduction in the early 1990s, the concept of streaming media has experienced an impressive growth and transformation from a novel technology into a mainstream mode in which people experience the Internet today. We record for example
an extraordinary number of more than 350 000 hours of live sports, music, news, and entertainment broadcast over the Internet every week (Conklin, Greenbaum, et al. 2001).
Broadly speaking, we can see the products of streaming video every day, such as live broadcasts, serials, Internet TV, and Internet radio.
For Taiwan, the most popular include: 17, househouse.in, and foreign platforms like Twitch, Meerkat, Periscope, and social networking sites such as Facebook, YouTube, and LINE. This situation has created many streaming celebrities and led to the rise of various real-time APP platforms. According to market estimattions, the size of the Taiwan live broadcast market is about 25 billion yuan. Another evidence is that, according to statistics from the 1111 Human Resources Bank (one of the famous recruitment websites in Taiwan), 44% of office workers in Taiwan want to become online celebrities as new business opportunities for online celebrities continue to increase. The scale of the Taiwan streaming market has grown rapidly from NT $ 500 million in 2014 to NT $ 12 billion in 2017. In 2019, the revenue is estimated to exceed 10 billion. This impressive growth rate speaks for itself.
Costa and Cunha (2004) mentioned that the three key characteristics of streaming media are: high bandwidth requirements, real-time media delivery, and the possibility of partial or interactive access. The high bandwidth requirements and the possibility of partial or interactive access motivated the development of not only new scalable streaming protocols but also challenge the devices’ efficiency. In addition to technical aspects, the real-time constraints on media delivery also fundamentally changed the traditional media industry and stimulated the transformation of the media to the content industry.
To sum up, as a booming industry, various business models are also valued by marketers in the whole market. In this study, we target the streaming industry is trying to show the particularity customer decision making of emerging industries, and also expect to test the traditional consumer behavior principles whether still be complied with the market environment that has a fuzzy online and offline distinction line.
Motivation
Checking the shopping category of searching trends in Taiwan on google trends, there is a gradual increase in “membership” during the past decade. To illustrate more, it is also can find a dramatic increase in “ watch online” in Sep. 2013 and Jan. 2017, then
“Netflix” pop up in Jan. 2016 and cross over “watch online” in Dec. 2018.
Figure1.1 Comparison of Membership (blue), Watch online (red), and Netflix(yellow) searching trends on Google trends, with the set (1) location in Taiwan (2) period from 2004-2019 (3) shopping category.
Video streaming platforms have become a trend in recent years. It is also a very
successful paid-up membership system outside of Costco's retail industry. In order to understand people's payment behaviors on video streaming platforms, we design this research base on several behavioral economics theory. These trends not only became the motivation for this research but also show the significance and interestingness of this research topic.
Purpose
As an authoritative theory, the principles in behavioral economics theory have been regarded as a source of theoretical foundation that must be referred to in recent consumer behavior research. Much research has defined behavioral economics working on the study of the allocation of behavior within a system of constraint (Bickel, Green & Vuchinich, 1995). The main two fundamental concepts that are taken into considerasion,as provided
by behavioral economics, are the elasticity of demand and time discount (Bickel, Madden
& Petry, 1998).
In this research, the discount rate of customers will be tested as a moderator variable in the payment’s decision-making process. This idea stems from the increasingly important influence of mental accounting theory in recent years. However, the research on payment decision making of the behavioral economics field are scarce. Therefore, we organized our research based on research related to consumer behavior bias in the behavioral economics field. Though we do effort on the relationship between intertemporal consumption and the hedonic framing, we develop hypotheses based on the theory of behavioral economics and mental accounting. Tahler (1999) consolidated mental accounting matters, the paper mentioned in a short paragraph to illustrate the relationship between payment methods and mental accounting. We find that mental accounting focuses on the development of the current compound choice problem, and does not much consider the impact of intertemporal consumption in the decision-making process. In such cases, we believe that our research can attempt to answer some questions that have been overlooked in mental accounting theory.
On the other hand, streaming platforms are a service that is booming, this studyaims to find out if there are some different consumer behaviors from traditional industry other than those proposed by previous researches.