The Incentive Effect Of The Compensation Contract On The User-Generated Content Producers

With the rise of social networks,many social media websites and platforms provide people with the opportunity to share their original content online.A social networking website with huge user scale(e.g.Zhihu,Douyin,XimalayaFM,Kuaishou,Panda TV,Huya TV,Tencent Literature,Youtube Live,etc.)has established a content community that breaks the limits of space and time.People share their own life experiences on the UGC platform,convey joy and happiness to others.User-generated media successfully attracts millions of viewers and readers.The number of the users and viewers gets exponential growth,which has determined its huge market value in turn.The capital market provides a high valuation for UGC platforms which can visually reflects the commercial value of the UGC platform.The UGC platform benefits from advertising sales,viewer subscriptions,and merchandize sales.The media producer,especially those with stable content creation,and the UGC platform benefit from monetary revenue.In the end,the overall relationship reached a win-win situation.In this article,we examine the principal-agent relationship between the UGC platform and the media producers.In the relationship,UGC platform acts as a provider of production materials including hardware and software devices,and we can regard it as a principal.The media producers produce content stably,and we can treat producers as agents.First,we analyze how much incentive the website should provide considering the producer's risk aversion,randomness of return and the amount of pleasure from sharing media broadcasting.We establish two kinds of models including Salary-commission compensation and commission-only compensation.Especially,contrary to the common sense,the website may sometimes be better off by providing some base salary.In addition,we further study how nonmonetary terms could be incorporated into the compensation plan;we show that adding non-monetary does not give producers extra incentives;however,it does increase the producers' utility and does not affect the website's profit.Second,we study the impact of producer broadcast non-revenue generating content.For example,some producers advertise products during the broadcast which cannot generate revenue for the website,so that the returns to this activity benefits only the producer.Through research,we find that these non-revenue-generating broadcasting activities should not always be refrained as they may increases the website's revenue indirectly.