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Pay for Content or Pay for Marketing? An Empirical Study on Content Pricing

Lunch-Seminar CIREQ-Concordia 2018-2019
joint with the Department of Economics, Concordia University

room H-1154 (Concordia University, 1455 de Maisonneuve Blvd West, 11th floor)

OrganizerTatyana Koreshkova (Concordia U.)

 

RÉSUMÉ

The development of the Internet makes more and more people publish contents on the Internet, for example, uploading videos on YouTube, posting ideas on Facebook, etc. Interesting content brings many fans to these content providers and gives these user accounts considerable potential commercial value. Then a natural question is: what is the potential commercial value of a good content provider? Using unique data from a popular textual content sharing platform, we are the first to answer pricing strategies of different types of content providers when each audience needs to pay an annual fee for access to contents. Model estimates reveal that content providers weigh potential benefits of expanding their audience against costs of sharing revenue when they can spend a portion of their revenue on marketing. We find that marketing effectiveness of difference types of content influences the proportion of users joining through sharing links and further affects the revenue loss. Our counterfactual analysis shows huge demand loss due to increased platform commission fee, which suggests that policy-makers should enhance the competition among content provision platforms for higher social welfare.

Keywords: content pricing, reward incentive, platform policy, structural estimation

JEL Classification Numbers: L12, L14, L25, L51

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