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Media, Aggregators, and the Link Economy: Strategic Hyperlink Formation in Content Networks

Author

Listed:
  • Chrysanthos Dellarocas

    (School of Management, Boston University, Boston, Masssachusetts 02215)

  • Zsolt Katona

    (Haas School of Business, University of California, Berkeley, Berkeley, California 94720)

  • William Rand

    (Robert H. Smith School of Business, University of Maryland, College Park, Maryland 20742)

Abstract

A defining property of the World Wide Web is a content site's ability to place virtually costless hyperlinks to third-party content as a substitute or complement to its own content. Costless hyperlinking has enabled new types of players, usually referred to as content aggregators, to successfully enter content ecosystems, attracting traffic and revenue by hosting links to the content of others. This, in turn, has sparked a heated controversy between content creators and aggregators regarding the legitimacy and costs/benefits of uninhibited free linking. To our knowledge, this work is the first to model the complex interplay between content and links in settings where a set of sites compete for traffic. We develop a series of analytical models that distill how hyperlinking affects the (a) incentives of content nodes to produce quality content versus link to third-party content, (b) profits of the various stakeholders, (c) average quality of content that becomes available to consumers, and (d) impact of content aggregators. Our results provide a nuanced view of the so-called link economy, highlighting both the beneficial consequences and the drawbacks of free hyperlinks for content creators and consumers. This paper was accepted by Lorin Hitt, information systems.

Suggested Citation

  • Chrysanthos Dellarocas & Zsolt Katona & William Rand, 2013. "Media, Aggregators, and the Link Economy: Strategic Hyperlink Formation in Content Networks," Management Science, INFORMS, vol. 59(10), pages 2360-2379, October.
    • Handle: RePEc:inm:ormnsc:v:59:y:2013:i:10:p:2360-2379
    DOI: 10.1287/mnsc.2013.1710
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    References listed on IDEAS

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