Ad Revenue and Content Commercialization: Evidence from Blogs

Abstract

Many scholars argue that content providers, when incentivized by ad revenue, are more likely to tailor their content to attract “eyeballs,” and as a result, popular content may be excessively supplied. We empirically test this prediction by taking advantage of the launch of an ad-revenue-sharing program initiated by a major Chinese portal site in September 2007. Participating bloggers allow the site to run ads on their blogs and receive 50% of the revenue generated by these ads. After analyzing 4.4 million blog posts, we find that, relative to nonparticipants, popular content increases by about 13 percentage points on participants’ blogs after the program takes effect. This increase can be partially attributed to topics shifting toward three domains: the stock market, salacious content, and celebrities. We also find evidence that, relative to nonparticipants, participants’ content quality increases after the program takes effect.

Keywords: ad-sponsored business model, media content, blog, revenue-sharing

JEL Classification: L82, L86