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Frontiers: Content Quality Provision and Welfare Implications of Digital Platform Commission Fees

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Listed:
  • Siddhartha Sharma

    (Kelley School of Business, Indiana University, Bloomington, Indiana 47405)

  • Amit Mehra

    (Naveen Jindal School of Management, University of Texas at Dallas, Richardson, Texas 75080)

Abstract

Several digital content developers, including Epic Games and Spotify, have voiced concerns that the commission fees charged by platforms (e.g., Apple’s App Store, Sony PlayStation) are too high and stifle innovation. Therefore, they advocate for a reduction in the commission rates. This paper employs a game-theoretic model to analyze a platform ecosystem comprising two competing platforms, hardware devices compatible with these platforms, and a representative content developer to examine whether reducing commission rates improves content quality provision and consumer surplus. Our findings reveal that reducing the commission rate may not always enhance content quality. Moreover, even when a lower commission rate reduces content quality, the developer may still be better off. We also find that consumer surplus may decrease as the commission rate declines. These results are primarily driven by platforms raising device prices when commissions decrease, thereby contracting the developer’s effective market.

Suggested Citation

  • Siddhartha Sharma & Amit Mehra, 2026. "Frontiers: Content Quality Provision and Welfare Implications of Digital Platform Commission Fees," Marketing Science, INFORMS, vol. 45(2), pages 249-257, March.
    • Handle: RePEc:inm:ormksc:v:45:y:2026:i:2:p:249-257
    DOI: 10.1287/mksc.2024.1084
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