Digital content platforms such as YouTube, TikTok, and Twitch rely on third-party providers and share advertising revenue to incentivize content production. Yet, as providers increasingly distribute content across multiple platforms, competition intensifies and platforms consider exclusive contracts to restrict providers’ multihoming behavior. Our research develops an analytical model to examine when exclusive contracts benefit or harm platforms, providers, consumers, and overall welfare. We find that exclusivity has two key forces: it limits the number of providers on each platform, reducing same-side crowding, but it also weakens the effectiveness of revenue sharing as a competitive tool for attracting providers. As a result, exclusivity benefits platforms only when consumers place low marginal value on content, leading platforms to offer lower sharing rates and earn higher profits. When consumer valuation is high, exclusivity can backfire, reducing platform profits. Importantly, exclusivity can increase provider surplus and even generate win–win outcomes for both platforms and providers at intermediate valuation levels. Although exclusivity reduces consumer surplus because of fewer providers, total social welfare may still increase because of reduced competition costs among providers. These findings suggest policymakers should take a nuanced stance toward regulating content exclusivity.
Wei et al. (Thu,) studied this question.