Welfare Implications of Democratization in Content Creation

Abstract

The rise of content-creation technologies such as generative artificial intelligence (Gen-AI) has reshaped the way people produce and consume content. These technologies democratize content creation, enabling inexperienced individuals to generate content that rivals the quality produced by professionals. This paper adopts a game-theoretic model to study how the democratization of content creation affects welfare. While the content-democratization technology can assist low-quality creators in improving their content quality, it can precipitate a flood of low-quality content in the market and crowd out high-quality content production, leading to losses in welfare. When the content quality of the low-quality creators is at a low level, the technology reduces welfare; when it is at a high level, the technology raises welfare.

Furthermore, when platforms can more effectively screen content and promote high-quality content, welfare rises but the technology is more likely to result in a welfare loss. In addition, the paper analyzes the welfare impact of the technology when it influences content variety, when creators have limited technology accessibility, and when consumers are averse to technology-generated content. Our findings help explain the distinct impacts of content democratization in different industries.

Keywords: generative AI, ChatGPT, content creation, attention competition, consumer welfare, game theory

JEL Classification: O33, L82, L86