1.1 Basic situation of online celebrity economic development
According to Insight Report on Chinese Internet Celebrities’ Economic Development by I-research, by the end of April 2018, the number of online celebrities who attract more than 100,000 fans had increased by 51% comparing with 2017's. At the same time, the total number of Chinese online celebrity fans maintained a growing trend, reaching at 588 million people. With growth of the number of online celebrities and fans, the scale of the online celebrity market, as well as the ability of participants in industrial chain to get profit are further enhanced. In the process, advertising becomes the main way for online celebrities to get benefit. On this basis, the MCN platform is an abbreviation of multi-channel network platform. This platform is a bilateral market based on information flow. In this platform, offline manufactures (especially advertisers) can find suitable influencers for the promotion of goods and services. Economic benefits can be achieved through cooperation with content providers, and the entire platform benefits by charging appropriate commissions or dividends; MCN platform enterprises are expressed as network channel providers for e-commerce, advertising enterprises and live broadcast industries and communicate with network consumers to get the profit. In the process, MCN platform cooperates with the online celebrity group to provide business support and training, exchanging for registration fee and profit bonus. On the other hand, the manufactures of goods and services need to improve the power of influence through the Internet, and also depends on the MCN platform to explore suitable online celebrity endorsement. Under the push of two-side market demands, MCN platform become the backbone of commercial chain and become the link between the upstream and downstream industry trading. Therefore, the research on platform transaction pricing under online celebrity economy requires with practical guiding significance. In this paper, online celebrity refers to a group of young entrepreneurs who rely on the publicity channels of the Internet to improve their popularity, and then equips with the temperament of personalizing idols, at the time, gain benefits from network consumers and some platform enterprises. On the other hand, MCN platform enterprises are expressed as network channel providers for e-commerce, advertising enterprises and live broadcast industries and communicate with network consumers to get the profit.
1.2 Literature review
This paper mainly studies the domestic and foreign literature on platform pricing. Due to the characteristics of two-side market, most scholars focus on the pricing behavior of the theory of two-side market.
In terms of foreign literature, Caillaudetc  proposed a price strategy aiming at solving the excessive competition of the platform in the industrial chain. Rochet etc.  discussed the optimal pricing problem of platform under monopoly platform and competitive platform, and draw the conclusion that the price distribution is proportional to the elasticity of bilateral price demand. Armstrong  studied the price decision problem about three kinds of platform competition: monopoly platform, bilaterally owned competition platform and unilateral owned competition platform, which concluded that the equilibrium price is related to the cross network effect, charging method and market structure.
Economides etc.  pointed out that the net neutrality of the Internet is analyzed with the price tool of two-sided market theory, and it is found that the net neutrality platform increases the total surplus in a certain range of parameter about cross-network externality compared with private platform, while decreases the total surplus in another parameter range.
In terms of domestic literature in China, Ji  studied the registration fee, transaction fee and two-step charge could impact the profit and welfare. Wang etc.  analyzed the pricing and profit distribution of the platform and content provider in the new video business operation. Xing etc.  discussed that the pricing problem of logistics information platform in the two-side market between the vehicle owner and the good owner, and puts forward a relatively perfect pricing model.
2 Two-side market of the online celebrity economy
As there are obvious two-sided markets characteristics for platform economy, the main features of the two-side market naturally exist in the network system of the multi-channel network platform (MCN) recognized as the trading platform [8,9,10]. In order to simplify the analysis, in the relatively closed network architecture, we need the following structure figure of the two-side market under the online celebrity economy.
Through analysis of the relationship between the three parties, offline manufacturers of goods and services need network window to expand business and improving reputation. Therefore, looking for appropriate online celebrity from MCN platform is needed for offline manufactures. At the same time, online celebrities recognize MCN as a platform and cooperation object, which could cultivate and support the group of online celebrity and help this group match appropriate offline manufactures of goods and services and gain benefits from this trade. In order to simplify the analysis, the possibility of collusion about the offline manufactures and online celebrities in private is too low. On the one hand, this collusion is limited by the high transaction cost. On the other hand, the MCN platform could require both sides meet exclusive contract and improve the penalty fees for them.
In this process, the MCN platform, as an information intermediary institution, could get benefits because of the two-side market advantages For offline manufactures of goods and services, the MCN platform get offline sponsorship and service cost by providing online advertising window and matching online celebrity endorsements. On the other hand, the MCN platform could get registration fee or deposit (even bonus from the cooperation between potential costumer and online celebrities) from the group of online celebrity.
3 Pricing of the monopoly platform
The ecosystem of Multi-channel Networks (MCN), aimed at providing network publicity window for offline manufactures of goods and services and providing a channel to match online celebrity endorsements with potential customers, is a comprehensive trading system with multiple stakeholders, including MCN platform enterprises, offline manufactures of goods and services, the group of online celebrity, advertising agencies, third-party platforms, training institutes, and Internet users. But the core of this ecosystem is the MCN organization, the manufactures of goods and services and the group of online celebrity. As mentioned in the previous section, MCN helps these offline manufactures to find appropriate online celebrities to improve their reputation in the space of the Internet and encourage the group of the online celebrity to match these potential customers to achieve values. Furthermore, advertising agencies, third-party platforms and training institutions will be attracted to serve for bilateral users (online manufactures of goods and services and the group of online celebrity) to form an ecosystem of platform business. The MCN platform charges online manufactures of goods and services and the group of online celebrity, and they decide whether to join the platform according to the charges and the benefit of cross network effect on the platform (cross-network effect refers to the effect of the number of one-side uses on the utility of another side uses in the platform).
3.1 Platform stakeholders
(1) Offline manufactures of goods and services
Where m refers to the number of times that offline manufactures of goods and services look for proper online celebrity endorsements on the MCN platform during a trading cycle; α1 is expressed as the marginal utility of finding the appropriate online celebrity candidates or can also be interpreted as the cross network effect of offline manufactures of goods and services; λ refers to the probability of finding the appropriate online celebrity endorsement on the platform; t means the opportunity cost of offline manufactures of goods and services looking for the appropriate online promotion window by themselves; ns is expressed as the number of the active online celebrities on the Internet and xi□U(0, 1), which is defined as the difficulty of the offline manufactures of goods and services to find online advertising window by themselves.
(2) The group of online celebrity
Where v refers to the value that the MCN platform provides for the group of online celebrity by themselves; α2 is expressed as the marginal utility of finding the appropriate offline manufactures of goods and services; λ refers to the probability of finding the appropriate offline manufactures of goods and services on the platform; p2 refers to the registration fees or deposits that the platform charges the group of online celebrity; fyj means the opportunity cost of the group of online celebrity looking for the appropriate offline manufactures of goods and services by themselves and yj□U(0, 1), which is defined as the difficulty of the group of online celebrity to find potential customers by themselves.
(3) MCN platform
Where p1 refers to the charges to offline manufactures of goods and services; p2 is expressed as the charges to the group of the online celebrity; θ refers to the bonus taken by the MCN platform from the benefits due to the success that the group of online celebrity matches with offline manufactures of goods and services. In order to simplify analysis, the marginal and fixed costs are assumed 0.
3.2 Bilateral market demand of the platform
3.3 Optimal pricing of the MCN platform
- (1)The opportunity cost differences between producers and web celebrity groups are large enough, ft − λ2m2α1α2 > 0, and the platform profit function is the joint concave function about p1, p2.
- (2)All offline manufactures of goods and services and online celebrities cannot be fully attracted by the platform.
- (3)α1, α2, λ, m, f, t, v, θ > 0.
- (1)There is a positive correlation between the price that should pay for the MCN platform and their cross-network effects. When α1 > α2,
. When α1 ≤ α2, .
- (2)There is a negative correlation between the price that the group of online celebrity should pay for the MCN platform and their cross-network effects. When
, . Otherwise, .
- (3)In the information platform for online celebrities, the charging prices of offline manufactures of goods and services and the group of online celebrity are satisfied as follows:
3.4 Sensitivity analysis
According to the equation (8), cross network effects, value-added service revenues, and the number of times about offline manufactures of goods and services participating in transactions could affect equilibrium prices. Proposition 2 could be gotten by sensitivity analysis for α1, α2, θ, m.
When α1 ≥ α2,
Whether α1 ≥ α2 or
3.5 Extension: only charge to one side
It is assumed that, due to internal or external reasons of the platform, the platform can only charge to one side of bilateral users and be free for another side. The purpose of the platform is to attract the offline manufactures of goods and services or online celebrities, especially in the initial stage of information platform.
(1) only charge to manufactures of goods and services
Due to the Proposition 1, when
(2) only charge to the group of online celebrity
When α1 > α2, due to only charging fees to the group of online celebrity separately, the equilibrium price is less than charging bilateral fees’ and the quantity of offline manufactures of goods and services is larger than charging bilateral fees’. When α1 ≤ α2, due to only charging fees to the group of online celebrity separately, the equilibrium price is larger than or equal to charging bilateral fees’ and the quantity of offline manufactures of goods and services is less than charging bilateral fees’.
Therefore, when α1 > α2, Δp2 > 0, Δnc > 0, Δns < 0. When α1≤ α2, Δp1 ≤ 0, Δnc ≤ 0, Δns ≤ 0.
4 Competition bidding of duopoly platform
Assuming that the offline manufactures of goods and services and the group of online celebrity can only join one platform, and the platform charges for both sides. Under the condition of the charges of platform, if the group of online celebrity could find the appropriate offline manufactures of goods and services, it is not necessary to pay for two platform fees at the same time. On the other hand, offline manufactures of goods and services demand to join two platforms for finding appropriate online celebrities but this thought is restricted by platform exclusivity agreements.
4.1 Quantity of bilateral users on the platform
4.2 The optimal pricing
The equation (44) shows that when there are two competing platforms, the optimal pricing of the two MCN platforms for the manufactures of goods and services and the group of online celebrity are equal, and the price increases as the enlarge of degree of differentiation between different offline manufactures of goods and services and between different online celebrities. But the price goes down with the development of platform technology and with improvement of the quantity about offline manufactures of goods and services.
On the other hand, the optimal price decreases as the increase of the cross network effect of both sides. Meanwhile, the price of online celebrities decreases as the increase of value-added service benefits to the platform. It can be seen from (45) that the equilibrium profit of the two platforms is equal, which increases as the rise of the differentiation degree of bilateral users and decreases with the rise of network effect.
With the increasingly development of the Internet technology, the MCN information platform based on the Internet plays a more and more important role in the development for offline commodities and services, especially in widening the publicity window and attracting online consumers. There are obvious two-sided market characters for this type of MCN platform. Through the analysis of the pricing mechanism in the profit model of the platform and solution of the pricing decision model about the MCN platform, there are some following conclusions.
First of all, the optimal price decision method based on the cross network externalities and value-added service fees of MCN platform is proposed. At the same time, the conditions of collecting fees and free charges for offline manufactures of goods and services and the group of online celebrity are respectively pointed out by sensitivity analysis. Under the market structure of the monopoly platform and when the strength of cross network effect about offline manufactures of goods and services is larger than online celebrities’, the manufacturer should be charged. Otherwise, offline manufactures of goods and services should be free or subsidized. When online celebrity group's value to the platform is greater than a certain critical value, the group of online celebrity should be free or subsidized; otherwise, online celebrity group will be charged. In value-added service platform mainly for online celebrity group (offline manufactures of goods and services) and when the group of online celebrity (offline manufactures of goods and services) to the platform creates more value than a certain critical value, the price of these manufactures (the group of online celebrity) should be higher than the group of online celebrity (offline manufactures of goods and services). Otherwise, the price for offline manufactures of goods and services(the group of online celebrity) should be less than the group of online celebrity (offline manufactures of goods and services).
Secondly, comparing with unilateral charge and bilateral charge, the rule that the price of unilateral charge is higher than bilateral charge is found, but the platform profit of bilateral charge is higher than unilateral charge. In the actual operation of MCN platform, if the market concentration degree is relatively large (the situation of forming a near-monopoly) and the number of bilateral users is basically equaling, then the reasonable allocation of fees to bilateral users will obtain greater benefits than collecting fees only from the unilateral user.
Finally, if the monopoly platform is extended to the competition platform, the method of symmetrical equilibrium optimal price is proposed. Under the market structure of monopolistic competition between the two platforms, the balanced profits of the two platforms and the balanced pricing of bilateral users are equal respectively. These balanced profits and prices increase with the rise of the degree of differentiation between offline manufactures and the group of online celebrity; theses balanced profits and balanced prices decrease as the development of platform technology and the increase of the quantity of offline manufactures; these profits and prices reduce with the improvement of cross network effects, at the same time, the price of online celebrity group goes down as the rise of revenue that the group of online celebrity creates for the MCN platform.
Regarding for the future prospects of the model about the Internet celebrity economy, researchers can further study the vertical integration model and vertical non-integration model of the entire industry chain from the perspective of game theory respectively.
Caillaud B and Jullien B. Chicken & egg: competition among intermediation service providers. The Rand Journal of Economics, 2004, 34(2): 309–328.
Rochet J and Tirole J. Platform competition in two-sided markets. Journal of the European Economic Association, 2003, 1(4): 990–1029.
Economides N and Tag J. Network neutrality on the internet: a two-sided market analysis. Information Economics and Policy, 2012, 24 (2): 91–104.
Ji HL. Research of Pricing Mode of Two-sided Markets. Industrial Economics Research, 2006, 23(4): 11–20.
Wang CL and Xin ZH. Analysis on the Coopetition Games Between Duopoly Platforms in the Emerging Video Services. Journal of Beijing University of Posts and Telecommunications, 2012, 35(3): 61–63.
Xing DN, Zhao QL, Gao HH. Study of Pricing Strategies for Logistics Information Platform Based on the Theory of Two-sided Markets. Journal of Business Economics, 2018, (6): 5–15.
Ji YN, Xu XY, Sun YH. Cooperation strategies for e-commerce platforms with seller classification, Kybernetes, 2016, 45 (9): 1369–1386.
Kung LC and Zhong GY. The optimal pricing strategy for two-sided platform delivery in the sharing economy. Transportation Research Part E: Logistics and Transportation Review, 2017, (101): 1–12.
Kafle N, Zou B, Lin J. Design and modeling of a crowd source-enabled system for urban parcel relay and delivery. Transportation Research Part B: Methodological, 2017, (99): 62–82.