For most platforms, a key challenge is to design appropriate incentive mechanisms that effectively motivate relevant participants in an open environment. In this paper, the authors aim to focus on a three-sided content platform involving creators, users and advertisers and investigate the strategic design of such mechanisms. Specifically, this study analyzes and compares three common incentive schemes: content-volume-based, view-volume-based and a hybrid of the previous two.
Using a game-theoretic model that captures the interactions among all parties, this study derives closed-form equilibrium solutions for the platform’s optimal incentive fees and advertising prices, as well as for creators’ content-production levels and payoffs.
The analysis reveals a striking equivalence among the three schemes: despite their structural differences, they yield identical equilibrium outcomes in content production, user engagement, advertising metrics and platform profit. Moreover, the optimal hybrid incentive fees are simply a convex combination of optimal incentive fees under the two pure schemes, giving managers budgetary flexibility without affecting performance.
This study contributes to the literature on multisided platforms by demonstrating the strategic substitutability of common incentive structures and by providing a unified framework for understanding platform design when advertising levels and creator competition are endogenous.
