Smart Data Pricing

Chapter 13To Tax or To Subsidize: The Economics of User-Generated Content Platforms

SHAOLEI REN and MIHAELA VAN DER SCHAAR

13.1 Introduction

Enabled by ubiquitous broadband connectivity and seamlessly accessible wireless connections, user-generated content platforms have witnessed in the past few years an explosive growth, allowing everyone to conveniently publish information online and share their knowledge, opinions, experiences, and so on with the rest of the world. Every day, millions of people “tweet” on Twitter, update their status on Facebook, ask and answer questions on Yahoo! Answers, and share their videos on YouTube. As user-generated content platforms are becoming an integral part of our lives, both Internet users and platform owners are eager to see the continuing growth of such platforms, which are nonetheless largely hindered by a number of obstacles, notably low quality content and lack of revenue sources. Typically, users can view the content for free while they post content on user-generated content platforms voluntarily. Thus, users often have little incentive to devote their efforts into improving content quality, resulting in low quality content published on the platforms. To tackle this, various mechanisms have been proposed to promote high quality content produced by users. For example, a common approach is to eliminate or hide low quality content as adopted by popular web sites such as Yahoo! Answers [1]. While incentivizing high quality content contributions ...