Monetizing Digital Content with Network Effects

Vincent Meisner and Pascal Pillath
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Vincent Meisner: HU Berlin
Pascal Pillath: HU Berlin

No 541, Rationality and Competition Discussion Paper Series from CRC TRR 190 Rationality and Competition

Abstract: We design profit-maximizing mechanisms to sell an excludable and non-rival good with positive and/or negative network effects. Buyers have heterogeneous private values that depend on how many others also consume the good. In optimum, an endogenous number of the highest types consume the good, and we can implement this allocation in dominant strategies. We apply our insights to digital content creation, and we are able to rationalize features seen in monetization schemes in this industry such as voluntary contributions, community subsidies, and exclusivity bids.

Keywords: mechanism design; non-rival goods; club goods; network effects; digital content; creator economy (search for similar items in EconPapers)
JEL-codes: D82 (search for similar items in EconPapers)
Date: 2025-07-30
New Economics Papers: this item is included in nep-com, nep-des, nep-gth, nep-inv, nep-mic and nep-pay
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Persistent link: https://EconPapers.repec.org/RePEc:rco:dpaper:541

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