238 / 2024-04-23 18:08:49

Partial revenue sharing as an incentive program for creators

content platforms,incentive plan,partial revenue sharing,market uncertainty

Digital content platforms, such as YouTube and Spotify, typically take revenue sharing (RS) policy with content creators to incentivize high-quality content production and increase viewing. However, RS policy fails to deal with the uncertainty of content market output because platforms take a cut from the creators even with bad market response. Some platforms have launched a new incentive, named partial revenue sharing (PRS) policy. Under PRS policy, the platform sets a threshold value of charging commissions to creators such that the platform only takes a cut of the creators’ revenue above the threshold value. In this paper, we construct a Stackelberg game model to explore the platform's monetary incentive policy choice (specifically, whether to adopt PRS policy and the threshold design) and the creator's quality decision. Our results the platform prefers PRS policy when the revenue sharing ratio is low and the market uncertainty is high, which reveals its effectiveness in dealing with market volatility. Contrary to intuition, an increase in the probability of good market state does not necessarily lead to an increase in utilities of the platform and the creator under PRS policy due to change in quality. Our findings provide guidance with platform managers on whether and when the platforms should adopt PRS policy and how to design the threshold value of charging commission to creators.