Some media platforms earn their profits from both consumers and advertisers (e.g., Spotify, Hulu), whereas others earn their profits from either advertisers only (e.g., Jango, Tubi) or consumers only (e.g., Tidal, Netflix). Thus, media platforms adopt divergent strategies depending on how they allocate the limited space or bandwidth between content and advertising. In this paper, we examine media platforms’ content provision strategies and their implications for the profits of media platforms as well as content suppliers, taking into account the cross-side effects of a multisided media market and the nature of competition in the content supplier market. To facilitate the analysis, we propose a model where media platforms interact with three sides: content suppliers, consumers, and advertisers. First, our analysis of a perfectly competitive content market shows that though consumers’ desire for content raises the willingness to pay, it can hurt platforms’ profits. Second, counter to our intuition, platforms’ profits can increase with the cost of procuring content. Third, advertisers’ desire for consumers reduces a monopoly content supplier’s profits under a paid-content-with-ads strategy. Fourth, a monopoly content supplier cannot extract all the profits from competing platforms. Furthermore, competing content suppliers may even charge higher prices than a monopoly content supplier. Finally, we highlight how the nature of competition in the content market shapes platforms’ choice of a no-ad strategy.
- PhD, Duke University, 2018
- Bachelor in Economics, Tsinghua University, 2012
Jinzhao joined the University of Hong Kong in 2018, after receiving his Ph.D. in Business Administration (Marketing) from Duke University. Before that he received his Bachelor degrees in Economics from Tsinghua University.
His research interests lie in the area of multi-sided markets, including media markets and matching markets. His work focuses on understanding the strategic interaction among the multiple players in media markets: content suppliers, advertisers, media platforms, news aggregators, and consumers. He also examines how a matching platform can improve matching efficiency through limiting the cross-side information exposure.
- Pricing Strategies (MKTG3527)
- Introduction to Marketing (MKTG2501)
Platform-based marketing, Multi-sided media market, Matching, Applied game theory.
- Jinzhao Du and Ying Lei (2022), “Information Design of Matching Platforms when User Preferences are Bidimensional,” Production and Operations Management, 31(8), 3320-3336.
- Wilfred Amaldoss, Jinzhao Du, and Woochoel Shin (2021), “Media Platforms’ Content Provision Strategies and Sources of Profits,” Marketing Science, 40(3), 527-547.