Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/229515
Authors: 
Kerkhof, Anna
Year of Publication: 
2020
Series/Report no.: 
CESifo Working Paper No. 8697
Abstract: 
This paper studies the effect of advertising on content differentiation on YouTube, the second-most visited website in the world. I demonstrate that an exogenous increase in the feasible advertising quantity leads to a considerable decrease in the YouTubers’ probability to duplicate mainstream content, i.e., the type of content that attracts the largest number of views. The result is driven by an intuitive mechanism: Mainstream content is provided by many competing YouTubers; thus, viewers who perceive advertising as a nuisance – and therefore as an implicit price they have to pay – could easily switch to a competitor if a YouTuber increased her advertising quantity. Switching is less likely, however, if the YouTuber differentiates her content from the mainstream, gains market power in a niche, and thereby softens competition in the ad “price."
Subjects: 
advertising
content differentiation
economics of digitization
horizontal product differentiation
long tail
media diversity
user-generated content
YouTube
JEL: 
D22
L15
L82
L86
Document Type: 
Working Paper

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