User-Generated Content, Strategic Moderation, and Advertising

38 Pages Posted: 2 Apr 2020

See all articles by Leonardo Madio

Leonardo Madio

University of Toulouse 1 - Toulouse School of Economics (TSE); CESifo (Center for Economic Studies and Ifo Institute)

Martin Quinn

CATÓLICA-LISBON School of Business & Economics

Date Written: March 9, 2020

Abstract

Social networks act as "attention brokers'' and stimulate the production of user-generated content to increase user activity on a platform. When ads are displayed in unsuitable environments (e.g., disputed material), advertisers may face a backlash. This article studies the incentive for an ad-funded platform to invest in content moderation. We present several results. Firstly, there is a U-shaped relation between ad prices and brand safety: the highest ad price arises for full or no content moderation. Secondly, content moderation decreases when platform competition intensifies and this configures a market failure. We show that these results provide important implications for platform regulation and highlight that well-intended policy measures might lead to the spread of harmful content.

Keywords: Online advertising; Content Moderation; User-generated Content; Platforms; UGC.

JEL Classification: L82; L86; M3.

Suggested Citation

Madio, Leonardo and Quinn, Martin, User-Generated Content, Strategic Moderation, and Advertising (March 9, 2020). Available at SSRN: https://ssrn.com/abstract=3551103 or http://dx.doi.org/10.2139/ssrn.3551103

Leonardo Madio (Contact Author)

University of Toulouse 1 - Toulouse School of Economics (TSE) ( email )

Place Anatole-France
Toulouse Cedex, F-31042
France
31000 (Fax)

HOME PAGE: http://www.leonardomadio.eu

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

Martin Quinn

CATÓLICA-LISBON School of Business & Economics ( email )

Palma de Cima
Lisbon, Lisboa 1649-023
Portugal

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