Page 16 - 33-2
P. 16
o
i
udiences,
any
t
tems
where
.
creator to attract audiences, where > . Increasing any of these three items
a
Increasing
attract
hese
of
t
c
reator
hree
t
Increasing
hese
creator to attract audiences, where > . Increasing any of these three items
reator
attract
.
t
of
t
any
hree
t
tems
o
c
i
udiences,
where
a
�
�
reator
hese
t
any
creator to attract audiences, where > . Increasing any of these three items
i
c
o
of
a
attract
Increasing
t
>
.
where
t
udiences,
hree
tems
�
�
>
�
�
th
a
the
ases
to
o
n
advertising
e
umber
f
o
incre
increases the expected number of views. Collectively, the total amount of advertising
Collec
v
t
f
iews.
expec
t
ed
ases
o
to
ed
expec
iews.
the
mount
ively,
t
n
tal
a
v
o
f
t
increases the expected number of views. Collectively, the total amount of advertising
advertising
e
umber
incre
f
th
Collec
incre
umber
o
advertising
a
ases
f
mount
n
to
ively,
tal
expec
t
e
o
th
ed
the
f
v
iews.
Collec
increases the expected number of views. Collectively, the total amount of advertising
t
3 3
atform for a video is
revenue paid by the sharing platform for a video is ( ) .
revenue paid by the sharing pl
(
revenue paid by the sharing platform for a video is ( ) .
3 3
3
� �
atform for a video is
revenue paid by the sharing platform for a video is ( ) .
revenue paid by the sharing platform for a video is ( ) . 3
revenue paid by the sharing pl
� �
)
(
� �
w
from
fee
business
differently.
Advertorial
owners
Advertorial fee from business owners works differently. To pay for an
orks
To
a
f
pay
or
n
business
a
differently.
owners
Advertorial
or
n
pay
Advertorial fee from business owners works differently. To pay for an
orks
w
fee
To
f
from
differently.
owners
orks
pay
f
from
or
business
Advertorial fee from business owners works differently. To pay for an
Advertorial
w
fee
n
To
a
,
.
a
certain
o
.
request
owner
h
would
advertorial,
d
advertorial, a business owner would request a certain performance threshold (e.g.,
l
business
e
r
erforman
g
t
s
e
(
c
e
g
p
(
erforman
owner
.
would
l
d
request
o
a
e
h
c
t
a
.
business
e
advertorial, a business owner would request a certain performance threshold (e.g.,
e
certain
r
s
,
advertorial,
h
a
business
request
e
erforman
p
h
r
g
t
l
advertorial, a business owner would request a certain performance threshold (e.g.,
d
e
o
,
s
h
owner
.
e
.
a
advertorial,
certain
c
would
(
ks),
e
he
p
w
r
views or clicks), which may or may not be met. The probability for a video to meet the
may
b
eet
not
met.
the
robability
clic
views
for
a
to
o
m
or
m
ay
video
hich
the
m
not
met.
hich
b
m
may
o
w
or
ay
to
T
views or clicks), which may or may not be met. The probability for a video to meet the
a
ks),
he
video
e
for
views
p
eet
robability
r
clic
m
b
views
a
T
ay
may
eet
w
views or clicks), which may or may not be met. The probability for a video to meet the
not
e
for
hich
ks),
to
or
m
the
robability
clic
he
o
r
video
met.
p
threshold is determined by both the creator’s effort level and ability . The higher and ability . The higher
threshold is determined by both the creator’s effort level and ability . The higher and ability . The higher
threshold is determined by both the creator’s effort level
� �
� �
threshold is determined by both the creator’s effort level and ability . The higher and ability . The higher
threshold is determined by both the creator’s effort level
� �
� �
threshold is determined by both the creator’s effort level
� �
� �
o
o
meet
oreover,
r
ing
el
M
threshold.
higher
e
effo
the effort level or ability, the higher the probability of meeting the threshold. Moreover,
ev
probability
f
rt
ability,
the
l
the
the
e
ing
the
higher
the effort level or ability, the higher the probability of meeting the threshold. Moreover,
threshold.
effo
o
th
r
meet
l
f
ev
rt
the
the
o
M
probability
el
oreover,
ability,
probability
o
higher
the
o
ev
ability,
effo
f
rt
meet
ing
th
the
e
oreover,
l
r
M
threshold.
the
el
the effort level or ability, the higher the probability of meeting the threshold. Moreover,
ability
t
a
i
l
rt
e
the effort level and ability are complementary: exerting effort is more effective for a
s
rt
effo
evel
comp
the
are
more
effo
xerting
e
for
and
ary
and
lemen
l
e
effo
evel
for
the
comp
rt
more
effo
effectiv
s
rt
are
i
xerting
the effort level and ability are complementary: exerting effort is more effective for a
ability
ary
e
t
a
and
are
rt
rt
i
lemen
t
effectiv
effo
ary
s
more
comp
evel
a
xerting
ability
the
for
l
e
effo
e
the effort level and ability are complementary: exerting effort is more effective for a
crea
ability.
T
hus,
the
eeting
or
f
igher
t
with
t
h
creator with higher ability. Thus, the probability of meeting the threshold for type-
probability
hreshold
of
ype-
tor
m
t
t
with
ype-
crea
t
m
hus,
of
eeting
ability.
hreshold
igher
or
f
h
creator with higher ability. Thus, the probability of meeting the threshold for type-
T
tor
probability
the
t
he
hreshold
tor
t
t
hus,
he
or
T
t
f
m
with
eeting
ype-
creator with higher ability. Thus, the probability of meeting the threshold for type-
probability
ability.
crea
the
of
h
igher
creator is , while the failed one is 1− . The business owner pays the , while the failed one is 1− . The business owner pays the
creator is , while the failed one is 1− . The business owner pays the , while the failed one is 1− . The business owner pays the
creator is
�
� �
�
� �
�
�
creator is
creator is , while the failed one is 1− . The business owner pays the , while the failed one is 1− . The business owner pays the
�
� �
�
�
�
� �
creator is
�
�
� �
� �
�
�
m
y
is
reshold
reator
c
or
eas
t
t
h
by
e
one
et
if
e
o
f
d
l
a
t
n
d
advertorial fee if and only if the threshold is met by at least one creator or nothing
ri
n
f
a
i
v
e
e
a
l
o
r
d
l
t
a
y
o
o
a
et
one
reator
or
h
is
f
l
e
i
eas
m
by
e
a
ri
f
if
n
t
e
n
nothing
d
reshold
th
v
c
advertorial fee if and only if the threshold is met by at least one creator or nothing
at
r
e
t
nothing
t
m
n
l
e
is
t
c
f
th
one
reator
et
e
e
ri
advertorial fee if and only if the threshold is met by at least one creator or nothing
o
a
at
a
v
l
eas
r
o
d
n
or
reshold
if
f
h
a
by
y
t
i
d
e
4 4
otherwise.
otherwise. The three scenarios with at least one creator meeting the threshold, their The three scenarios with at least one creator meeting the threshold, their
4 The three scenarios with at least one creator meeting the threshold, their The three scenarios with at least one creator meeting the threshold, their
4 4
otherwise.
otherwise.
otherwise. 4
otherwise. The three scenarios with at least one creator meeting the threshold, their The three scenarios with at least one creator meeting the threshold, their
probabilities of occurrence, and th th th lemen > : : : � � � � � � a T ively, at p � � � � � � l l l ) tal . . he mount h effectiv nothing
probabilities of occurrence, and the advertorial revenues for the MCN are summarized
N
e advertorial revenues for t
are summar
he MC
ize
d
probabilities of occurrence, and the advertorial revenues for the MCN are summarized
probabilities of occurrence, and th e advertorial revenues for t he MC N are summar ize d
ize
are summar
probabilities of occurrence, and th
probabilities of occurrence, and the advertorial revenues for the MCN are summarized
he MC
e advertorial revenues for t
N
d
a
i in Table 1.
.
n
1
b
l
e
T
T
l
b
a
e
.
i i in Table 1.
1
n Optimal Advertorial Allocation and Contract Design of a Multichannel Networks Company on Video Sharing
T
a
.
e
l
in Table 1.
1
b
n Platforms
Table 1. Expected advertorial revenue for MCN
Table 1. Expected advertorial revenue for MCN
Table 1. Expected advertorial revenue for MCN
Table 1. Expected advertorial revenue for MCN
Table 1. Expected advertorial revenue for MCN
Table 1. Expected advertorial revenue for MCN
Advertorial revenue
Who meet(s) the threshold
t
e
s
r
dvertorial revenue
h
l
obability
W h o m e e t ( s ) t h e Table 1 Expected Advertorial Revenue For MCN
A
o
P
d
Probability
h
r
obability
W h o m e e t ( s ) t h e t h r e s h o l d P Probability A dvertorial revenue
r
Who meet(s) the threshold
Advertorial revenue
W h o m e e t ( s ) t h e t h r e s h o l d P Probability A dvertorial revenue
r
obability
Who meet(s) the threshold
Advertorial revenue
Who meet(s) the threshold Probability Advertorial revenue
Both creators
Both creators (1− ) (1 − )(1− ) 5 5
(1− ) (1 − )(1− ) 5 5
Both creators
Both creators � � � � � (1− ) (1 − )(1− ) 5
� �
�
�
�
�
�
(1− ) (1 − )(1− ) 5
Both creators � � � � � ( (1− ) (1 − )(1− ) 1− ) (1 − )(1− ) *
Both creators
Both creators
�
�
�
�
� �
�
� �
�
�
�
�
�
� � � �
�
(1 − ) (1 − )
High-type creator ( (1− ) (1 − ) 1− ) (1 − )
High-type creator
High-type creator � � � � � � ( (1− ) (1 − ) 1− ) (1 − )
High-type creator
(1 − ) (1 − )
High-type creator
�
�
�
�
(1 − ) (1 − )
High-type creator
High-type creator � � � � � � ( (1− ) (1 − ) 1− ) (1 − )
�
�
�
�
�
�
� �
�
�
� �
�
�
Low-type creator
Low-type creator (1 − (1− )(1 − )
(1 − ) )
Low-type creator
1− )(1 − )
(
(1 − ) )
Low-type creator (1 − � � � � � � � (1− )(1 − )
Low-type creator
� �
�
�
(
1− )(1 − )
(1 − ) )
Low-type creator
Low-type creator
(1− )(1 − )
� �
�
�
�
� �
� �
(
(1 −
1− )(1 − )
Note:* The remaining ϕ H xA goes to the high-type creator, whereas the remaining ϕ L (1-x)A goes
�
�
� �
�
� �
�
� �
to the low-type creator. The revenue-sharing contract is modelled following the most classic
3 The additive format of the effect o f effort exertion and the convex setting of its cost have been widely f effort exertion and the convex setting of its cost have been widely
3 The additive format of the effect o
setting in literature. Interested readers may see Cachon and Lariviere (2005) for more
e
nv
ex
e add
t h
settin
e fo
co
s
h
een wi
its co
e
rtion
an
Th
f th
d
ely
f effort ex
e effect o
3 3 The additive format of the effect of effort exertion and the convex setting of its cost have been widely
g o
f
rmat o
a
itiv
d
ve b
t
g
and
n
(
7)
amon
in
adopted in literature, including Lal and Staelin (1986), Chen (2005), and Zhu and He (2017), among
Zhu
i
,
3 ad op ted i n itiv e fo rmat o clud e effect o and Staelin rtion 86), Ch e en ( nv ex 5) , and g o f its co s H e a ( ve b een wi d ely
re,
g
200
literatu
Lal
201
19
t h
co
Th
d
3 The additive format of the effect of effort exertion and the convex setting of its cost have been widely
e add
an
f th
f effort ex
settin
h
t
e
ted
adopted in literature, including Lal and Staelin (1986), Chen (2005), and Zhu and He (2017), among
op
re,
literatu
ad he rs. i i n information. in clud i i n g Lal and Staelin ( ( 19 86), Ch en ( ( 200 5) , and Zhu and H e e ( ( 201 7) , amon g
ad ot
others.
g
200
and
n
Lal
ted
g
Zhu
and
literatu
5)
and
19
,
en
7)
re,
H
Ch
,
op
86),
201
in
Staelin
amon
n
clud
adopted in literature, including Lal and Staelin (1986), Chen (2005), and Zhu and He (2017), among
ot
others.
rs.
ot he rs. r a c t i c e , a c r e a t o r m a y o b t a i n a c e r t a i n a m o u n t o f c o m p e n s at i on base d o n t he p er fo r mance of t he
he
others.
n
4
p
4 In practice, a creator may obtain a certain amount of compensation based on the performance of the
I
revenues for the MCN are summarized in Table 1.
a
o
t
o
m
i
a
r
t
n
o
I
mance
e
n
t
u
i
n
base
a
of
c
n
d
a
i
b
a
o
a
t
e
m
r
t
r
4 4 In practice, a creator may obtain a certain amount of compensation based on the performance of the
he
y
a
c
t
m
p
a
on
er
o
c
p
n
c
s
at
t
e
,
i
p
he
e
fo
c
r
n
o
r
f
ili
o
d
id
4 v
i
To avo
ty
is, we omit
alys
i
.
.
is po
s an
video. To avoid tedious analysis, we omit this possibility.
ted
u
e
th
ssib
o
he
er
4 In practice, a creator may obtain a certain amount of compensation based on the performance of the
r
I
t
of
mance
t
p
p
o
n
fo
he
n
r
n
e
s
o
e
,
e
p
a
on
o
i
i
c
n
m
at
f
c
m
y
o
i
r
c
c
a
m
o
a
a
i
a
r
a
base
t
c
b
a
o
t
u
d
t
t
t
n
e
a
n
r
ty
u
.
o
s an
ssib
o
d
To avo
i
v
th
is po
e
ili
.
id
i
alys
is, we omit
ted
3.1.2 Numeric Examples
o
.
ted
th
id
ili
v video. To avoid tedious analysis, we omit this possibility.
i
ssib
u
ty
alys
e
video. To avoid tedious analysis, we omit this possibility.
d
i
.
To avo
s an
o
is po
is, we omit
5 The remaining goes to the high-type creator, whereas the remaining (1 − ) goes to the goes to the high-type creator, whereas the remaining (1 − ) goes to the
5 The remaining
5 The remaining goes to the high-type creator, whereas the remaining (1 − ) goes to the goes to the high-type creator, whereas the remaining (1 − ) goes to the
To illustrate the relationship among the three players and the way that revenues are
� �
5 The remaining � � re ven u e -sha ri n g c ont r act i s model l e d fol l owing th e mo st classic set tin g in literature.
o
pe
or
y
c
l
w
The
.
-
reat
t
low-type creator. The revenue-sharing contract is modelled following the most classic setting in literature.
5 The remaining goes to the high-type creator, whereas the remaining (1 − ) goes to the goes to the high-type creator, whereas the remaining (1 − ) goes to the
�
�
� �
5 The remaining
mo
The
e
l
o
w
s
ont
e
model
u
pe
low-type creator. The revenue-sharing contract is modelled following the most classic setting in literature.
t
i
th
act
-
ven
.
�
� �
n
cho
Interested readers may see Cachon and Lariviere (2005) for more information.
re
ea
e
mo
inf
l Intere y sted c c reat d or rs ma � y re see Ca -sha n ri a n n g d c c La r r r r iv iere ( 20 0 5 l ) l ) e f f d o r r fol l l owing or mati o st . classic set tin g in literature.
r
o
act
literature.
i
low-type creator. The revenue-sharing contract is modelled following the most classic setting in literature.
s
re
e
or
ri
owing
t
-
.
fol
u
mo
-sha
st
pe
classic
reat
th
e
y
set
ven
w
g
g
ont
The
e
n
d
model
tin
in
shared, here we provide two numerical examples. In both examples, suppose that x = 7 (i.e.,
cho
see Ca
Intere
n
a
d
La
iv
n
e
o
rs ma
mo
0
re
d
5
o
or
r
ea
inf
.
mati
sted
y
20
Interested readers may see Cachon and Lariviere (2005) for more information.
iere (
n
Intere sted r ea d e rs ma y see Ca cho n a n d La r iv iere ( 20 0 5 ) f o r mo re inf or mati o n .
Interested readers may see Cachon and Lariviere (2005) for more information.
1
10
0
the MCN guarantees to give 70% and 30% of the advertorial fee to the high-type and low-
0
10
1
1
10
0
type creators, respectively), the total advertorial fee A = 10,000 (i.e., $10,000), γ = 1 (i.e.,
the video-sharing platform pays $1 of advertising revenue for each view), ϕ = 0.6, and
H
ϕ = 0.5 (i.e., the MCN left 60% and 50% of the revenue for the high-type and low-type
L
creators, respectively). The high-type creator’s video generates 1000 views while the low-
type one’s generates 500 views.
In our first example, suppose that the threshold is 800 views. Since the high-type
creator meets the threshold, she could get both advertorial fee and advertising revenue,
which is $4,800 in total (i.e., $10,000 × 0.7 = $7,000 from the advertorial fee plus $1
× 1,000 = $1,000 from the advertising revenue, and together multiplied by the revenue
sharing percentage 60%). As for the low-type creator, since he does not meet the threshold,
he gets nothing from the advertorial fee and only receives the advertising revenue,
which is $250 in total (i.e., $500 advertising revenue multiplied by the revenue sharing
percentage 50%). As for the MCN company, it earns ($7,000 + $1,000) × 0.4 = 3,200 from
the high-type creator and $3,000 + $500 × 0.5 = $3,250 from the low-type one. Note that
because the low-type creator does not meet the threshold, all the $3,000 goes to the MCN.
As another example, suppose that the threshold is actually 1,500 views. Since both
of the creators do not meet the threshold, none of the three players get the advertorial fee.
They only receive and share the advertising revenues, which are $600 for the high-type
creator, $250 for the low-type creator, and $650 for the MCN company.
8
