Wednesday, June 1, 2011

ZHANG Kaifu, ZUBCSEK Peter Pal
Community Leaders or Entertainment Workers? Incentivizing Content Generation in Social Media
INSEAD Working Paper 2011/68/MKT

The success of any User-Generated Content (UGC) website critically depends on the participation and effort of its content contributors. In this paper, we study the contributor motivation problem from a firm’s perspective. Drawing on the behavioral economics literature, we develop a unified framework of contributor behavior which captures diverse contributor motivations, including intrinsic fun, the need for self-expression, and monetary motivation. We focus on two decisions available to the firm which address different aspects of contributor motivations. First, we consider the website’s content promotion decision which addresses contributors’ need for self-expression by dictating the amount of viewer attention each content item receives. In equilibrium, the firm pursues either the “best take all” strategy where it directs all viewer attention to the highest quality content, or the “balanced allocation” strategy where all contributors, high skilled or low skilled, get a share of viewer attention. Second, we consider the firm’s monetary incentive decision. We find that under certain circumstances, paying the contributors may actually lower their efforts. In equilibrium, the optimal payment level changes discontinuously with the relative cost. The firm may either rely on socially motivated “community leaders” or on money-driven “entertainment workers” to generate the best content