Platform Coordination of the Sponsored Contents: A Game-Theoretical Analysis

Abstract

The prosperity of the content platforms (e.g., YouTube and TikTok) in the recent years has provided a novel channel of media exposure for advertisers. This paper develops a game-theoretical model to examine the role of platform advertising through both the platform itself and the content creators, i.e., the sponsored content. Interestingly, we find that the platform owner should allow both advertising channels to coexist, even they will affect the viewership negatively. We also extend our model in multiple ways, and discover that platform owner should prohibit sponsored content if the content quality would compromised with the sponsored content. We also study the roles of the creator contract and platform competition.