Streaming Platform and Strategic Recommendation Bias

41 Pages Posted: 3 Dec 2018 Last revised: 18 Mar 2021

See all articles by Marc Bourreau

Marc Bourreau

Telecom ParisTech

Germain Gaudin

University of Freiburg - College of Economics and Behavioral Sciences

Multiple version iconThere are 2 versions of this paper

Date Written: March 18, 2021

Abstract

We consider a platform that carries content from two upstream content providers and presents personalized recommendations to participating customers. We focus on streaming platforms in media markets, where users pay a subscription fee to join the platform but no usage fee, and consume a mix of content originating from each provider. We characterize the bias in the user-specific recommendations offered by the platform when one content provider charges lower royalties than the other. We establish that if consumers are sufficiently insensitive to bias, the recommendation system allows the platform to credibly threaten upstream providers to steer consumers away from their content, which reduces their market power. We also investigate the effects of vertical integration by the platform and show the robustness of our results to non-linear (personalized) streaming services.

Keywords: Streaming Platform, Recommendation System, Personalization, Bias

JEL Classification: D4, L1, L5

Suggested Citation

Bourreau, Marc and Gaudin, Germain, Streaming Platform and Strategic Recommendation Bias (March 18, 2021). Available at SSRN: https://ssrn.com/abstract=3290617 or http://dx.doi.org/10.2139/ssrn.3290617

Marc Bourreau (Contact Author)

Telecom ParisTech ( email )

46, rue Barrault
Paris Cedex 13, F-75634
France

Germain Gaudin

University of Freiburg - College of Economics and Behavioral Sciences

Freiburg, D-79085
Germany

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