Attracting Whom? - Managing User-Generated-Content Communities for Monetization

Successful monetization of user-generated-content (UGC) business calls for attracting enough users, and the right users. The defining characteristic of UGC is users are also content contributors. In this study, we analyze the impact of a UGC firm’s quality control decision on user community composition. We model two UGC firms in competition, with one permitting only high quality content while the other not controlling quality. Users differ in their valuations and the content quality they contribute. Through analyzing various equilibrium situations, we find that higher reward value generally benefits the firm without quality control. However, when the intrinsic value of contribution is low, higher reward value may surprisingly drive high valuation users away from that firm. Also somewhat interestingly, we find that higher cost of contribution may benefit the firm that does not control quality. Our work is among the first to study the business impact of quality control of UGC