Can math save content creators? A new model proposes fairer revenue distribution methods for streaming services

February 12, 2025 by Angeles Gallar, Miguel Hernandez University of Elche

Collected at: https://phys.org/news/2025-02-math-content-creators-fairer-revenue.html

As more consumers turn to subscription-based platforms, the distribution of revenue in streaming services has become a crucial issue in the digital economy. Content creators and artists argue that the current models are opaque, frequently neglecting the needs of creators.

In response, researchers at the Universidad Miguel Hernández (UMH) in Spain have proposed a model based on three allocation rules that could be applied according to various fairness criteria. The work has been published in the journal Omega.

“Our model is based on three main approaches: the equal division rule, which divides revenue equally among services; the proportional rule, which allocates revenue according to each service’s total consumption; and the subscriber-proportional rule, which assigns a subscriber’s fee based on their specific consumption,” explains UMH Professor Juan Carlos Gonçalves Dosantos, a researcher at the Institute Center for Operational Research.

The challenge of distributing profits between creators and platforms is not unique to major services like Netflix and Spotify, but also affects emerging platforms. Revenue structures in streaming—based on subscriptions, advertisements, and additional paid content—vary depending on each platform‘s business model.

For example, Twitch generates revenue from subscriptions to streamers’ channels, advertisements, donations, and the sale of virtual units like “Bits.” This diversity of income sources and the complexity of user-creator interactions makes revenue distribution challenging. The UMH researchers have used mathematical models to explore how these profits can be fairly allocated based on different criteria.

Professor Joaquín Sánchez Soriano of UMH explains that the models allow for an analysis of how different types of content impact overall revenue: “On platforms like Twitch, we see that the type of content directly influences revenue. Our study shows that categories with fewer users but greater viewing time can be more lucrative under a proportional approach.

“On the other hand, the subscriber-proportional rule prioritizes categories that attract more viewers, regardless of viewing time.”

The UMH study, conducted in collaboration with a researcher from the University of Granada, establishes clear guidelines for revenue distribution, which can help creators maximize their earnings and enable platforms to optimize their business models. “Our tool helps evaluate which content is more profitable and guides creators in adjusting their offerings to boost income,” adds Sánchez Soriano.

The mathematical model developed at UMH is based on the concept of attribution problems, which aim to distribute resources (in this case, generated revenue) fairly among different services according to the number of subscribers and their consumption.

“Each service is entitled to a share of the revenue based on its relevance and consumption, which presents a challenge due to the variety of content and its different impact on users,” notes Gonçalves Dosantos.

To illustrate its operation, Gonçalves Dosantos provides an example: “Consider a streaming platform offering two products with two subscribers. Both pay the same subscription fee, but their usage differs. The first subscriber dedicates an hour exclusively to the first product, while the second watches one hour of each product.”

Under the equal division rule, the revenue would be split equally, assigning 50% to each service regardless of viewing time. The proportional rule, which accounts for time, would allocate 67% of the revenue to the first service and 33% to the second. Finally, the subscriber-proportional rule, in addition to time, takes into account which product each subscriber consumes, assigning 75% of the revenue to the first product and 25% to the second.

This innovative approach could lead to a fairer distribution of profits, providing a clearer understanding of the economic dynamics in streaming services.

By applying these mathematical models, platforms could improve transparency in revenue distribution, a crucial step in maintaining balanced relationships with creators. The UMH researchers argue that this would promote a greater diversity of voices and support the sustainability of digital businesses.

More information: Juan Carlos Gonçalves-Dosantos et al, Revenue distribution in streaming, Omega (2024). DOI: 10.1016/j.omega.2024.103233