How do you sustain a business model in which users don’t pay for your service?
This question was addressed by US Senator Orrin Hatch to Facebook CEO Mark Zuckerberg during his April 2018 Senate hearings relating to the Cambridge Analytica incident. Zuckerberg’s answer accurately depicts the Internet’s most common business model: “We run ads”. Brands around the worldpay social media platforms for digital space where they compete for user attention and engagement. The resulting platform ad ecosystems are the reason why the current business models used on the Internet are fundamentally flawed. Companies register theirads in databases called 'ad archives', from where they can target selected de-mographics on the basis of the platform’s own user profiling practices. Advertising as a digital monetization model has been around sincethe early days of the Internet, as Internet users kept their wallets away from online services. The founders of Google themselves acknowledged the bias introduced by the commercial interests behind advertising in the architecture of search engines.
Until recently, the main stakeholders in Internet monetization were companies. Digital platforms sell ad space and companies buy it. Yet in the past decade this paradigm has been shifting. Based on an increase in social media consumption, content monetization makes it possible for any Internet user to not only engage with advertising, but become a vessel of advertising. As an illustration, some of the most popular advertising methods in content monetization include influencer and affiliate marketing. Both approaches consist in brandscontracting genuine, relatable influencers (also called content creators) to increase brand awareness or sales. These individuals create advertising contenton their social media profiles and channel their armies of followers to the brand partner. In turn, they receive money, goods or services. In 2021, influencermarketing is projected to reach a global market size of$13.8 billion (700% increase since 2016), and affiliate marketing is estimated to grow to$7 billion inthe US alone. However, monetization models do not necessarily involve advertising, but can also entail payable transactions. In this space, new models are generated at a skyrocketing pace. SignalFire, a data company working on social media, has recently made the first map of the creator economy, which shows the popularity of monetization on social media.
Creators can ask their fans to subscribe to their content, donate money to them, or even engage in gamified version of a’human stock market’, where creators can sell their decision-making power overday-to-day decisions.
This figure shows some of the most used content monetization models as we've identified in academic literature so far:
With more platforms adopting own monetization models, the dangers of platforms monopolizing advertising infrastructure and creator revenue increase exponentially. This is particularly troublesome when content creators claim to gather funding not only as income, but also for specific causes, whether personal, such as adoption costs or vet costs, or philanthropy by raising or giving away cash in times of crisis. The Web Monetization standard can make a two-fold contribution to this transparency and operability issue: first, it can offer audiences a more direct way of making payments, and it allows for payment systems to be developed in a more traceable way. Still, for the Web Monetization standard to make a significant difference, it needs to align the commercial interests of users who monetize fundraisers to the behavior of audiences who are willing contribute financially to the creators’ call for funding. This research aims to create and test a more transparent system for spontaneous microtransactions between creators and audiences, based on insights from both groups. While the dangers of opaque calls-to-action are gradually being exposed, the relationship between reputation, monetization and philanthropy, as well as their impact on the expectations of audiences and their willingness to financially support creators is in dire need of further exploration.
To tackle this issue, we've put together an interdisciplinary team from three institutes: the Maastricht Law & Tech Lab (Maastricht University), the Institute of Data Science (Maastricht University), and the Department of Computer Science from the University of York. The team currently consists of two main teams, one dealing with web development (led by the wonderful Visara Urovi) and one using qualitative empirical research (led my me) to better understand how we can help creators monetize their philanthropic initiatives.
The goals of our project are threefold:
- First, we aim to map existing monetization/altruistic incentives and models vis-à-vis crowdfunding, through interviews with content creators to understand the pro’s and con’s of existing platforms (e.g. Go Fund Me, Patreon, etc) and approaches, as well as the general legal risks involved in these activities. Engaging with communities of content creators in order to understand their monetization behaviors and needs is underrepresented in interdisciplinary scientific research, but vital in understanding the socio-economic ecosystem driven, among others, by monetization.
- Second, we will use this insight to shape our own proposal for a transparent and traceable solution for micropayments between users and content creators.
- Third, to test this solution on consumers and determine its desirability using an online experiment, in order to obtain more behavioral insights into consumer preferences in terms of monetization and crowdfunding. Overall, we believe that as an interdisciplinary team with an academic background, it is useful to base new tools on scientific evidence. For this reason, our project combines different methodologies in order to obtain insights from content creators and audiences alike.
After months of aligning disciplines and approaches, we're finally ready to share some insights and (unsurprisingly) even more questions that need to be addressed by future research, as a confirmation of the complexity of the monetization space. So if you're interested in the topic, follow our updates, and get in touch!