When engagement performs better: Revenue management on user-generated content platforms

Run Tang; Zhengyang Wang; Yangyang Peng; Ziyuan Zeng; Tong Zhang; Yingjun Shen; Run Tang; Zhengyang Wang; Yangyang Peng; Ziyuan Zeng; Tong Zhang; Yingjun Shen

doi:10.3934/jimo.2026011

Journal of Industrial and Management Optimization

2026, Volume 22, Issue 1: 282-309. doi: 10.3934/jimo.2026011

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Research article

When engagement performs better: Revenue management on user-generated content platforms

1.
School of Management Science and Engineering, Nanjing University of Finance & Economics, Nanjing 210023, China
2.
School of Government, Nanjing University, Nanjing 210023, China
3.
Shenzhen Research Institute of Big Data, Shenzhen 518172, China
4.
School of Public Policy, The Chinese University of Hong Kong, Shenzhen, Shenzhen 518172, China
5.
College of Art & Science, Boston University, Boston, Massachusetts 02215, USA
6.
Shenzhen Finance Institute, School of Management and Economics, The Chinese University of Hong Kong, Shenzhen 518172, China

Received: 23 June 2025 Revised: 12 October 2025 Accepted: 22 October 2025 Published: 25 November 2025
Primary: 91A10, 91A35; Secondary: 91B06

User-generated content (UGC) platforms, such as YouTube and TikTok, motivate creators through revenue-sharing mechanisms. However, it remains unclear whether platforms should allocate revenue based on viewership or user engagement. Linear viewership-oriented models often overlook the crucial role of engagement, which directly influences both content exposure and advertising revenue. In this study, we developed a stylized model comparing the Viewership-oriented Model (VOM) and the Engagement-oriented Model (EOM). The analysis demonstrated that EOM encourages higher content quality and platform incentives to promote engaging videos. When the revenue-sharing rates were endogenously determined, EOM could yield Pareto improvements and generate a win–win outcome for platforms and creators, reinforcing its managerial relevance. Overall, the study highlights that engagement-based contracts enhance the effectiveness and sustainability for the long-term growth of UGC platforms, offering practical implications for platform design and revenue management.
- revenue sharing,
- engagement,
- user-generated content,
- creator economy,
- game theory
Citation: Run Tang, Zhengyang Wang, Yangyang Peng, Ziyuan Zeng, Tong Zhang, Yingjun Shen. When engagement performs better: Revenue management on user-generated content platforms[J]. Journal of Industrial and Management Optimization, 2026, 22(1): 282-309. doi: 10.3934/jimo.2026011

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Abstract

User-generated content (UGC) platforms, such as YouTube and TikTok, motivate creators through revenue-sharing mechanisms. However, it remains unclear whether platforms should allocate revenue based on viewership or user engagement. Linear viewership-oriented models often overlook the crucial role of engagement, which directly influences both content exposure and advertising revenue. In this study, we developed a stylized model comparing the Viewership-oriented Model (VOM) and the Engagement-oriented Model (EOM). The analysis demonstrated that EOM encourages higher content quality and platform incentives to promote engaging videos. When the revenue-sharing rates were endogenously determined, EOM could yield Pareto improvements and generate a win–win outcome for platforms and creators, reinforcing its managerial relevance. Overall, the study highlights that engagement-based contracts enhance the effectiveness and sustainability for the long-term growth of UGC platforms, offering practical implications for platform design and revenue management.

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