Optimal IP-based content provision model for digital content platforms

Abstract

To increase the provision of digital content based on a pre-existing intellectual property (IP-based content), digital content platforms can either procure finished IP-based content made by IP holders (the IP-holder-led provision model) or develop IP-based content themselves after obtaining adaptation licenses from IP holders (the platform-led provision model). This study develops a stylized analytical model and finds that the platform's choice of provision model is determined by maximum demand, cost efficiency, and the difference in the capacity to generate content-derived revenue between the platform and the IP holder. We also examine the conditions under which a win-win-win outcome for the platform, the IP holder, and consumers can arise.