Page 20 - 33-2

�
�
Note that the decision variable affects and , which are determined independently by the two creators to maximize their own expected profits
Note that the decision variable affects and , which are determined

�
�
�
�
independently by the two creators to maximize their own expected profits
independently by the two creators to maximize their own expected profits

�
�
�
= max ( )
�
�
�
� �
�
Note that the decision variable affects and , which are determined
�

� �
�
�

�
�
�
�
�
�
= max ( )
= max ( )
�
� �
� �
�
� �
�
�
�
�
and
independently by the two creators to maximize their own expected profits
�
�
� �
� �
and
and
= max ( ) (1 ) .
�

�
�
�
�
�
= max ( )
�
�
�
�
� �
� �
�
�
�
�
�
�
� �
� �
= max ( ) (1 ) . .
�
�
�
�
�
�
= max ( ) (1 )
�
�
� �
�
�
� �
�
� �
�
�
and
�
� �
� �
3.4 Assumption
3.4 Assumption
3.4 Assumption
= max ( ) (1 ) .
�
�
�
To avoid tedious derivations that do not generate managerial insights, we make
�
� �
�
�
�
�
� �
To avoid tedious derivations that do not generate managerial insights, we make some technical assumptions throughout this study in Assumption 1. These assumptions
To avoid tedious derivations that do not generate managerial insights, we make Note that the decision variable affects and , which are determined
3.4 Assumption
some technical assumptions throughout this study in Assumption 1. These assumptions
some technical assumptions throughout this study in Assumption 1. These assumptions are used for all three MCN-creator structures.
Optimal Advertorial Allocation and Contract Design of a Multichannel Networks Company on Video Sharing
To avoid tedious derivations that do not generate managerial insights, we make
are used for all three MCN-creator structures. ���� ��� � � ��� � �(���)
are used for all three MCN-creator structures.
Platforms
�
Assumption 1. Let q = � and q =
�
�
some technical assumptions throughout this study in Assumption 1. These assumptions �� � (����) � �(��(���)�) ��
�
�
���
����
� � ���
� �(���)
�
�
and q =
Assumption 1. Let q = ���� ��� � � ��� � �(���) and q = ���� ��� � � ��� � �(���)
Assumption 1. Let q =
�
�
�
�
�
technical assumptions throughout this study in Assumption 1. These assumptions are used �(����) � �� . We assume that β β A < 2k , q ≥0 ,
�� � (����)
��
�� � (����)
��
�(��(���)�)
�
�
�(��(���)�)

are used for all three MCN-creator structures.
�
� �
�� � (��(���)�)
�
for all three MCN-creator structures.
�
�
� �(���)
����
���
� � ���
���� ��� � � ��� � �(���) . We assume that β β A < 2k , q ≥0 , ,
�
�
. We assume that β β A < 2k , q ≥0 � � � � � � � � � � � �
� �
�(����)
�� � (��(���)�) � � �(����) �� �� � � � � q ≥0 , 4kβ q ≤ 4k β β A , 4kβ q ≤ 4k β β A , 4k q ≤ (4k
�� � (��(���)�)
� �
� �
�
�
� �
� �
�
���� ��� � � ��� � �(���)
Assumption 1: Let = � and =
�
�
q ≥0 , 4kβ q ≤ 4k β β A , 4kβ q ≤ 4k β β A , 4k q ≤ (4k β β A )(γ xA), and 4k q ≤ (4k β β A )(γ (1 x)A).
�
�
�� � (����) � � �
� �
�
� � �
�
�(��(���)�)
�
�
�
�
�
�
�
�
� �
�
�
� � �
q ≥0 , 4kβ q ≤ 4k β β A , 4kβ q ≤ 4k β β A , 4k q ≤ (4k �� � � � � � � � � �
�
�
�
� �
� �
� �
� �
� �
� �
� �
�
� �
� �
�
. We assume that , ≥0 ,
���� ��� � � ��� � �(���)
β β A )(γ (1 x)A).
�
� � � � � � ≤ (4k β β A )(γ (1 x)A).
�
�
� � �
� �
�
� �
β β A )(γ xA), and 4k � � � �(����) � �� � � �
β β A )(γ xA), and 4k q q ≤ (4k
� �
�
� �
� �
�� � (��(���)�)
≥0 , 4 ≤ 4 , 4 ≤ 4 , 4 ≤ (4
�
�
�
�
�
� �
� �
�
�
�
These technical assumptions may be categorized into three groups according to
� �
�
� �
� �
� �
�
)( ), and 4 ≤ (4 )( (1 ) ).
� �
�
�
�
� �
�
These technical assumptions may be categorized into three groups according to their major implications. In particular, < 2 , ≥0, and ≥0 are to
These technical assumptions may be categorized into three groups according to � � � �
� �
� �
�
These technical assumptions may be categorized into three groups according to their

their major implications. In particular, < 2 , ≥0, and ≥0 are to � � � � � �
their major implications. In particular, < 2 , ≥0, and ≥0 are to make the MCN’s profit function concave, 4 ≤ 4 and 4 ≤
major implications. In particular, β β A < 2k, q ≥ 0, and q ≥ 0 are to make the MCN’s � � � � � �
�
�
� �
�
� �
�
L
H
H
L
make the MCN’s profit function concave, 4 ≤ 4 and 4 ≤ 4 are
profit function concave, are to make the probabilities for the creators to meet the target
and
�
�
�
� � �
�
�
�
�
� �
�
make the MCN’s profit function concave, 4 ≤ 4 and 4 ≤ � � � � � � �
These technical assumptions may be categorized into three groups according to
� �
� �
� �
� �
� �
� �
4. Equilibrium Analysis for the Independent-MCN
to make the probabilities for the creators to meet the target β e and β e no greater than
H
H
4 are to make the probabilities for the creators to meet the target H H
4 are to make the probabilities for the creators to meet the target and no greater than 1 in equilibrium, and the last two conditions are to make the
�
�
� �
�
� � �
their major implications. In particular, , ≥0, and ≥0 are to
1 in equilibrium, and the last two conditions are to make the revenue sharing ratios ϕ and
� �
� �
� �
� �
� �
�
� �
�
Structure (Structure I)
H
and no greater than 1 in equilibrium, and the last two conditions are to make the revenue sharing ratios and no greater than 1 in equilibrium.
and no greater than 1 in equilibrium, and the last two conditions are to make the � �
ϕ no greater than 1 in equilibrium.
� �
� �
L
�
� �
�
�
�
make the MCN’s profit function concave, 4 ≤ 4 and 4 ≤
� �
� �
� �
revenue sharing ratios and no greater than 1 in equilibrium.
revenue sharing ratios and no greater than 1 in equilibrium.

4 are to make the probabilities for the creators to meet the target
�
�
�
�
We first analyze the interaction of the three players under the independent-MCN
4. Equilibrium Analysis for the Independent-MCN Structure
�
� �
�
� �
� �
(Structure I)
and no greater than 1 in equilibrium, and the last two conditions are to make the 16
structure by backward induction. Once we characterize the equilibrium decisions, we
� �

revenue sharing ratios and no greater than 1 in equilibrium.
interpret the results and obtain managerial implications.
16
� 16
We first analyze the interaction of the three players under the independent-MCN
�
structure by backward induction. Once we characterize the equilibrium decisions, we

interpret the results and obtain managerial implications.
4.1 Creators’ Effort Exertion under Structure I
16
First, Given the allocation decision and revenue sharing percentages and
4.1 Creators’ Effort Exertion under Structure I

First, Given the allocation decision x and revenue sharing percentages ϕ and ϕ , we
, we derive the two players’ optimal effort levels, and . H L
�
�
I
I

derive the two players’ optimal effort levels, and . � �
e
e
H
L
Proposition 1: The optimal effort levels that creators should make are
Proposition 1. The optimal effort levels that creators should make are
� � � � � (����) � � � � � ���(���)�� (1) (1)
= and = .
� �
� �
Moreover, we have increases in ϕ , β , γ, A and decreases in k, where i ∈{H,L}.
I
� e
Moreover, we have e increases in ϕ , β , γ, A and decreases in k, where i ∈ �H, L�.
i
i
i
�
�
�
I
I
Besides, increases in x; while decreases in x.
e
e
L
H
Besides, e increases in x; while e decreases in x.
�
�
�
�

12
It is shown that each of the two effort levels is increasing in the revenue sharing
percentage , the creator’s ability , the per-view payment provided by the
�
�
sharing platform, the amount of the advertorial fee , and the guaranteed proportion of
the advertorial fee. In other words, the MCN company may incentivize a creator to
work harder by allocating more advertorial fees to her/him or leaving a larger share of
total revenue to her/him.
17