Content Quality Assurance on Media Platforms with User-generated Content

36 Pages Posted: 16 Oct 2022 Last revised: 12 Nov 2022

See all articles by Xingzhen Zhu

Xingzhen Zhu

Nanjing University of Science and Technology

Markus Lang

University of Lausanne

Helmut M. Dietl

University of Zurich - Department of Business Administration (IBW)

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Date Written: October 20, 2022

Abstract

This paper develops a duopoly model of user-generated content (UGC) platforms that compete for consumers and content producers in two-sided markets with network externalities. Each platform can choose the level of investment into a content quality assurance (CQA) system and the level of advertising. Our model shows that network effects crucially determine the platforms' optimal strategy and the behavior (single vs multi-homing) of their users. Specifically, we find that consumers are multi-homing and producers are single-homing when the network effects obtained by producers are weak, while the opposite is true if these network effects are strong. Moreover, our model shows that the user behavior and the network effects determine whether a platform has incentives to place ads and/or invest in CQA. In general, weak network effects induce a platform to invest in a CQA system except when consumers and producers are multi-homing. The results in our model suggests the need for platform companies to assess the magnitude of network effects on their platform to predict the behavior of their users, which in turn will determine the optimal CQA and advertising strategy.

Keywords: UGC platform, two-sided market, multi-homing, network externalities, platform investment

JEL Classification: C72, D85, L14

Suggested Citation

Zhu, Xingzhen and Lang, Markus and Dietl, Helmut M., Content Quality Assurance on Media Platforms with User-generated Content (October 20, 2022). Available at SSRN: https://ssrn.com/abstract=4239868 or http://dx.doi.org/10.2139/ssrn.4239868

Xingzhen Zhu

Nanjing University of Science and Technology

Markus Lang (Contact Author)

University of Lausanne ( email )

Quartier UNIL-Centre
Synathlon
Lausanne, 1015
Switzerland

Helmut M. Dietl

University of Zurich - Department of Business Administration (IBW) ( email )

Hottingerstrasse 10
Plattenstrasse 14
Zurich, 8032
Switzerland

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