Strategic Content Generation and Monetization in Financial Social Media

Abstract

Strategic Content Generation and Monetization in Financial Social MediaAbstractFinancial social media, which relies on social media analysts (SMAs) to contribute content to investors, is a crucial channel for investors to gain financial information and for SMAs to monetize their content. The interactive nature of financial social media has given SMAs the opportunity to gain access to the investor preferences of their own audience base for financial content. Our study documents that SMAs would exploit this opportunity to strategically generate and monetize content by catering to investor preferences. Specifically, SMAs would increase the (negative) sentiment of the content if paid subscribers’ preferences for (negative) sentiment grow. Additionally, an SMA is more likely to produce paid content when the expected free readership increases and is less likely to do so when the expected paid subscriptions increase. Our findings suggest that the sentiment of financial social media content is not a mere reflection or prediction of stock market movements but also a result of SMAs’ reaction to investor preferences. We thus illustrate an approach to identify the SMAs who may amplify the investors’ confirmation biases because of such catering behaviors so that platform managers and regulators alike can utilize this method to improve the content quality of financial social media.