Abstract

The webcast advertising market exhibits two unique features: the webcast platform and the anchor jointly provide webcast advertising; and the webcast platform determines the share of advertising revenue, the anchor decides whether to publish ads. We develop a two-sided market model including webcast platform, anchor, fan users and advertisers to analyze the role of these two unique features in determining the webcast platform’s optimal advertising revenue-sharing decision. The research results reveal an interesting inverted-V-shaped dynamic structure, that is, the optimal advertising revenue sharing strategy of the webcast platform changes with the overall advertisers’ valuation of the webcast ads. When the valuation of advertising is at a medium level, the webcast platform is motivated to give up more revenue share to subsidize the anchor via the advertising channel, leading to greater profits for both of them. In all regions, the optimal profits of the webcast platform and the anchor increase as the switching cost of fan increases. The anchor can increase fan stickiness by providing high-quality content, thereby increasing fan loyalty and expanding the fan user base.

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