Optimal Management of Digital Content on Tiered Infrastructure Platforms

Media firms are increasingly using tiered infrastructure to cost-effectively manage heterogeneous resources by strategically allocating digital content across multiple tiers to avoid overcapacitating high-performance, expensive infrastructure tiers. Complex migrations in tiered environments are currently possible in a seamless, nondisruptive manner. We model digital content as a network capturing the inter-item impacts and use this network structure to develop optimal migration policies that partition media content into tiers. Addressing the context of large content providers such as video-on-demand providers that employ infrastructure platforms for content storage and delivery, we develop a bilevel programming model to maximize the profits of a price-setting platform and a tiered allocation-setting content provider. We model two fundamental effects with digital content: a revenue effect emanating from the tiered architecture and a traffic generating effect among media objects. Using a detailed longitudinal simulation study, we demonstrate the effectiveness of the proposed provisioning policy and pricing strategy and illustrate the existence and impact of these effects in media markets. Finally, we show that repeated execution of the model can help providers respond effectively to a changing environment and thus better manage the risk from demand fluctuations.