You Get What You Pay For! An Economic Analysis of the Impact of Data Sponsorship on Content Production
Authors: Wang, Xin; Wang, Chong (Alex); Qiu, Liangfei; Weng, Xi
Journal: Information Systems Research (2026)
<jats:p>Practice- and Policy-Oriented Abstract</jats:p> <jats:p>The pricing strategies employed by internet service providers (ISPs), such as AT&T, can significantly influence the decisions of content creators—like video streaming platforms or app developers—regarding the types of content they offer. One such strategy is “sponsored data,” where content providers pay ISPs so that users can access their content without using their own data allowances. This study examines the effects of data sponsorship on content quality, company profits, and consumer benefits. Our analysis reveals that the efficiency of content providers in producing high-quality content is a critical factor. When creating high-quality content is difficult or expensive, sponsored data allows ISPs to increase their profits but can harm content providers by driving overly aggressive competition for users. Conversely, when producing high-quality content becomes easier or less costly—such as with the support of artificial intelligence—sponsored data can benefit both content providers and consumers, albeit at the expense of ISP profits. As advancements in technology continue to facilitate content creation, ISPs and poli…