EXPRESS: Welfare Implications of Democratization in Content Creation: Generative AI and Beyond

The rise of content-creation technologies such as generative artificial intelligence (Gen-AI) has reshaped the way people produce and consume content. These technologies democratize content creation, enabling inexperienced individuals to generate content that rivals the quality produced by professionals. This paper adopts a game-theoretic model to study how the democratization of content creation affects welfare. While the content-democratization technology can assist low-quality creators in improving their content quality, it can precipitate a flood of such content in the market and crowd out high-quality content production, leading to welfare losses. An incremental technology development with low reduction in quality gap can hurt individual consumers and all creators, leading to a lose-lose market outcome. In contrast, a drastic one with high reduction in quality gap benefits individual consumers and all creators, leading to a win-win outcome. Furthermore, when platforms can more effectively screen content and promote high-quality content, welfare rises but the technology is more likely to reduce welfare. The findings help explain the distinct impacts of content democratization in different industries.