Environmental Taxation for Reducing Emissions from Online Advertisement in Music Streaming Services

As usage of music streaming services grows, so does their impact on the environment. Adopting a freemium business model, a model that combines a subscription-based system with an ad-supported limited free version increases that impact. In this paper, we show that a tax on the environmental impact of music streaming services (e.g., a carbon tax) can promote a more environmentally and economically sustainable subscription-only, premium business model. We develop a simulation model using compartmental methods, with an implementation in Python, that represents the competition between a freemium service and a premium service, in two different market stages (young and mature markets). We show that an environmental tax is able to reduce overall environmental impact, promote more sustainable alternatives, and increase benefits due to higher returns from premium subscribers.