【公开学术报告】The Impact of Platform Commission Design on Creators’ Pricing Strategy and Productivity

The Impact of Platform Commission Design on Creators’ Pricing Strategy and Productivity

Guest Speaker:            Pu ZHAO (Boston University)

Date & Time:              9:30-11:00 (Beijing Time), Tue. 17th, Oct. 2023

Classroom:           Room 2101, Tongji Building A

ABSTRACT

We study the impact of platform commission design on creators’ pricing strategies and productivity. We use data from a leading Chinese creator platform that significantly changed its commission policies. In August 2019, the platform raised its commission from 5% to 20% simultaneously for all creators, while subsequently allowing certain eligible creators to revert the commission to the original 5% and receive a “business” badge upon platform validation. We find that the initial simultaneous 15% commission increase led to a 3% increase in price and a 12% decrease in the number of posts published. This means creators passed through 20% of the commission increase to subscribers while compensating themselves by a significant reduction in labor output. Using a staggered difference-in-differences design, we also study the impact of eligible creators reverting to the original 5% commission. We find that treated creators whose commission reverted to 5% increased the price by 11%, the number of posts they published by 37%, and the number of questions they answered by 15%, compared to untreated creators whose commission stayed at 20%. The result of increased price induced by the commission reduction is in stark contrast to the traditional analysis of third-degree price discrimination. We conjecture that the treated creators who received the “business” badge consolidated people’s perceived content provision quality which would attract more residual demand and reinforce the trust of the existing subscribers, allowing these creators to charge higher subscription price.

Keywords: Platform Commission Design, Third-Degree Price Discrimination, Interrupted Time Series, Staggered Difference-in-Differences