On click-fraud under pro-rata revenue sharing rule
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arXiv
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| Format: | Preprint |
| Veröffentlicht: |
2026
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| _version_ | 1866908985297207296 |
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| author | Yu, Hao |
| author_facet | Yu, Hao |
| contents | Click-fraud is commonly seen as a key vulnerability of pro-rata revenue sharing rule on music streaming platforms, whereas user-centric is largely immune. This paper develops a tractable non-cooperative model in which artists can purchase fraud activity that generates undetectable fake streams up to a technological limit. We defend pro-rata by showing that it is fraud-robust: when fraud technology is weak, honesty is a strictly dominant strategy, and an efficient fraud-free equilibrium obtains; when fraud technology is strong, a unique fraud equilibrium arises, yet aggregate fake streams remain bounded. Although fraud is inefficient, the resulting redistribution may improve fairness in some cases. To mitigate fraud without abandoning pro-rata, we introduce a parametric weighted rule that interpolates between pro-rata and user-centric, and characterize parameter ranges that restore a fraud-free equilibrium under technology constraint. We also discuss implications of Spotify's modernized royalty system for fraud incentives. |
| format | Preprint |
| id |
arxiv_https___arxiv_org_abs_2601_09573 |
| institution | arXiv |
| publishDate | 2026 |
| record_format | arxiv |
| spellingShingle | On click-fraud under pro-rata revenue sharing rule Yu, Hao Theoretical Economics Click-fraud is commonly seen as a key vulnerability of pro-rata revenue sharing rule on music streaming platforms, whereas user-centric is largely immune. This paper develops a tractable non-cooperative model in which artists can purchase fraud activity that generates undetectable fake streams up to a technological limit. We defend pro-rata by showing that it is fraud-robust: when fraud technology is weak, honesty is a strictly dominant strategy, and an efficient fraud-free equilibrium obtains; when fraud technology is strong, a unique fraud equilibrium arises, yet aggregate fake streams remain bounded. Although fraud is inefficient, the resulting redistribution may improve fairness in some cases. To mitigate fraud without abandoning pro-rata, we introduce a parametric weighted rule that interpolates between pro-rata and user-centric, and characterize parameter ranges that restore a fraud-free equilibrium under technology constraint. We also discuss implications of Spotify's modernized royalty system for fraud incentives. |
| title | On click-fraud under pro-rata revenue sharing rule |
| topic | Theoretical Economics |
| url | https://arxiv.org/abs/2601.09573 |