Generative artificial intelligence, content creation, and platforms

Abstract

Generative AI (GenAI) is a rapidly growing technology that is expected to transform business and society. An important question is how it will affect platforms and their ecosystems, especially human-generated content upon which many platforms rely. We develop an analytical model to study the economic impact of content platforms that use GenAI, namely GenAI content platforms (GCPs). A GCP connects consumers to content generated by creators or the GenAI and offers APIs and tools to developers who build new applications in a third market. We find that although platforms have incentives to moderate the use of GenAI, this technology increases prices and reduces the quantity and number of content creators. This effect is not homogeneous, as GenAI has less influence on competitive or high entry-cost markets. Consequently, consumer welfare in content markets is reduced, but this decline varies by market. Overall, our analysis contributes to the platform and the AI economics research literature by providing testable hypotheses about the impact of GenAI in platform settings.