Profit maximization on user-generated content platforms

Shaolei Ren, Jaeok Park, Mihaela Van Der Schaar

Research output: Chapter in Book/Report/Conference proceedingConference contribution

3 Citations (Scopus)

Abstract

In this paper, we consider a user-generated content platform monetized through advertising and managed by an intermediary. We study a payment scheme in which the intermediary either taxes or subsidizes a content producer an amount of money proportional to the number of views of the producer's content. First, we use a model with a representative content viewer to determine how the content viewers' attention is allocated across available content by solving a utility maximization problem. Then, by modeling the content producers as self-interested agents making independent production decisions, we show that there exists a unique equilibrium in the content production stage, and propose a best-response dynamics to model the decision-making process and to reach the equilibrium. Next, we study the optimal payment scheme (i.e., the payment scheme maximizing the intermediary's profit) that the intermediary chooses taking into account the decisions made by the representative content viewer and the content producers. In particular, by considering the well-known quality-adjusted Dixit-Stiglitz utility function for the representative content viewer, we derive explicitly the optimal payment per content view and characterize analytical conditions under which the intermediary should tax or subsidize the content producers. Numerical results show that under some scenarios, by using the proposed payment scheme, the intermediary may even double its profit that can be obtained without the proposed scheme.

Original languageEnglish
Title of host publication2011 49th Annual Allerton Conference on Communication, Control, and Computing, Allerton 2011
Pages135-142
Number of pages8
DOIs
Publication statusPublished - 2011 Dec 1
Event2011 49th Annual Allerton Conference on Communication, Control, and Computing, Allerton 2011 - Monticello, IL, United States
Duration: 2011 Sep 282011 Sep 30

Other

Other2011 49th Annual Allerton Conference on Communication, Control, and Computing, Allerton 2011
CountryUnited States
CityMonticello, IL
Period11/9/2811/9/30

Fingerprint

Taxation
Profitability
Dynamic response
Marketing
Decision making

All Science Journal Classification (ASJC) codes

  • Computer Networks and Communications
  • Control and Systems Engineering

Cite this

Ren, S., Park, J., & Van Der Schaar, M. (2011). Profit maximization on user-generated content platforms. In 2011 49th Annual Allerton Conference on Communication, Control, and Computing, Allerton 2011 (pp. 135-142). [6120160] https://doi.org/10.1109/Allerton.2011.6120160
Ren, Shaolei ; Park, Jaeok ; Van Der Schaar, Mihaela. / Profit maximization on user-generated content platforms. 2011 49th Annual Allerton Conference on Communication, Control, and Computing, Allerton 2011. 2011. pp. 135-142
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Ren, S, Park, J & Van Der Schaar, M 2011, Profit maximization on user-generated content platforms. in 2011 49th Annual Allerton Conference on Communication, Control, and Computing, Allerton 2011., 6120160, pp. 135-142, 2011 49th Annual Allerton Conference on Communication, Control, and Computing, Allerton 2011, Monticello, IL, United States, 11/9/28. https://doi.org/10.1109/Allerton.2011.6120160

Profit maximization on user-generated content platforms. / Ren, Shaolei; Park, Jaeok; Van Der Schaar, Mihaela.

2011 49th Annual Allerton Conference on Communication, Control, and Computing, Allerton 2011. 2011. p. 135-142 6120160.

Research output: Chapter in Book/Report/Conference proceedingConference contribution

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Ren S, Park J, Van Der Schaar M. Profit maximization on user-generated content platforms. In 2011 49th Annual Allerton Conference on Communication, Control, and Computing, Allerton 2011. 2011. p. 135-142. 6120160 https://doi.org/10.1109/Allerton.2011.6120160