On Georgetown University’s McDonough School of Business Week: Creators want to get paid for their work, but should they also release content for free as well?
Ziwei Cong, assistant professor of marketing, says yes.
Ziwei Cong is an Assistant Professor of Marketing at McDonough School of Business, Georgetown University. Her research employs econometrics and machine learning methods to investigate the designs of digital platforms (e.g., recommendation algorithms and business models) and the decision-making processes of content creators and influencers. Ziwei has received several awards for her research, including the 2021 Vithala R. and Saroj V. Rao ISMS Doctoral Dissertation Award (winner), the 2020 Shankar-Spiegel Dissertation Proposal Award (runner-up), and the finalist of the 2020 Best Doctoral Dissertation Proposal Competition at the American Statistics Association (Marketing Section).
The Impact of Freemium Models on Content Creators and Platforms
With the rise of the creator economy, many content platforms are exploring ways for creators to monetize their content. Many have adopted freemium models, an increasingly popular approach that allows creators to offer paid content directly to their audience. For example, YouTube now enables users to monetize certain videos through a pay-to-view option. This shift raises important questions about platform dynamics: How does the introduction of a freemium model reshape the content ecosystem? Will creators shift their efforts toward paid content, potentially reducing the supply of free content on the platform?
To explore this, we study a large content platform in China. The platform started as a Q&A community that is similar Reddit or Quora and later introduced a monetization feature that allowed users to host paid live events.
Contrary to concerns about a decline in free content, we find that users who participate in the paid program actually increase their contributions of free content relative to nonparticipants. Further analysis suggests that this pattern is strategic. Participants use free content as a promotional channel to attract attention and build reputation for their paid events. For instance, creators tend to increase their free content production as the paid event approaches or when they face heightened competition within their category.
Does this free content matter? Our analysis shows that it does. The additional free content not only helps creators attract new followers but also leads to higher sales of paid events. In this way, free content becomes an investment in audience-building and future monetization.
These findings suggest that freemium models can have a positive effect on a platform’s content ecosystem. For platforms, these suggest that rather than taking on the burden of promoting individual creators, platforms can achieve more by letting creators to promote themselves.
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