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Lecture: Advertising Format and Content Provision on Revenue-Sharing Content Platforms

Title: Advertising Format and Content Provision on Revenue-Sharing Content Platforms

Time: 9:00, January 10, 2022

Room: N424

Speaker: Pro. Jiang Baojun

Abstract：The digital content market has grown dramatically in recent years. Many platforms （e.g., YouTube, Twitch, and Instagram） show ads when consumers watch the content on their platforms, and they share ad revenue with content creators to incentivize them to create and share content. These platforms generally adopt either a uniform-advertising format （i.e., the platforms display the same number of ads irrespective of content quality） or a differentiated-advertising format （i.e., the platforms display the number of ads based on content quality）. This paper shows that, regardless of the ad format, an increase in content homogeneity on the platform can increase the content creators’ profits and the consumer surplus. By contrast, an increase in content homogeneity can benefit the platform under uniform advertising but not under differentiated advertising. Moreover, the equilibrium ad revenue-sharing rate, content quality, and the number of ads shown for each content will be lower under differentiated advertising than under uniform advertising. The platform’s profit and the consumer surplus are also lower under differentiated advertising than under uniform advertising. However, depending on the level of content homogeneity on the platform, the content creators’ profits can be higher or lower under differentiated advertising. In an extension, we also analyze an emerging ad format in which the platform allows content creators themselves to decide the number of ads on their content. Interestingly, we show that this new ad format can make all the market participants （i.e., the platform, the content creators, and the consumers） worse off.