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3.2 The Leagued-MCN Structure (L)

Optimal Advertorial Allocation and Contract Design of a Multichannel Networks Company on Video Sharing
Under the leagued-MCN structure, all the settings are similar to the independent-
Platforms
MCN structure except for the ownership of the MCN company. Instead of an

independent MCN company existing in the market, the MCN company is co-owned by

both high-type and low-type creators. The two creators jointly determine the allocation

of the advertorial and the two effort levels. The industry structure of leagued-MCN is

depicted in Figure 3.
Figure 2 Sequence of Events

Table 2 List of Decision Variables and Parameters
Decision variables
x The advertorial proportion allocated to the high-type creator
ϕ H The revenue sharing percentage left for the high-type creator
ϕ L The revenue sharing percentage left for the low-type creator
e H The effort level that the high-type creator makes
e L The effort level that the low-type creator makes
Parameters
β H The ability of the high-type creator
β L The ability of the low-type creator
Figure 3. The leagued-MCN structure
a The natural traffic of views
γ the per-view payment provided by the sharing platform
The total amount of advertorial fee
A Due to the integrated ownership, both players have the same goal: maximizing the
k The cost coefficient for creators to make videos (k > 0)
total profit earned by the two players. As a result, the two decision variables previously
Due to the integrated ownership, both players have the same goal: maximizing the
made by the MCN (the advertorial proportion allocated to the creators and the
total profit earned by the two players. As a result, the two decision variables previously
made by the MCN (the advertorial proportion allocated to the creators x and the revenue
revenue sharing percentage left for the creators ) disappear, and the two creators
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sharing percentage left for the creators ϕ ) disappear, and the two creators together make
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together make their effort exertion decisions to solve
their effort exertion decisions to solve
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3.3 The No-MCN Structure (N)
Note that while the leagued-MCN structure may serve as a benchmark of the
independent-MCN structure for us to assess the impact of the MCN company, there
is another possibility to do the assessment: completely removing the MCN company.
Therefore, to better figure out the benefit brought by the MCN company, if any, we
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consider the third industry structure, the no-MCN structure, which is in between the
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