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Monetizing Digital Content with Network Effects

Author

Listed:
  • Vincent Meisner

    (HU Berlin)

  • Pascal Pillath

    (HU Berlin)

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.

Suggested Citation

  • Vincent Meisner & Pascal Pillath, 2025. "Monetizing Digital Content with Network Effects," Rationality and Competition Discussion Paper Series 541, CRC TRR 190 Rationality and Competition.
    • Handle: RePEc:rco:dpaper:541
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    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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