tag:theconversation.com,2011:/us/topics/monetisation-11963/articlesMonetisation – The Conversation2021-12-23T10:27:33Ztag:theconversation.com,2011:article/1730302021-12-23T10:27:33Z2021-12-23T10:27:33Z‘Very sneaky tactics’: we asked gamers how they feel about monetisation in digital gaming<figure><img src="https://images.theconversation.com/files/438424/original/file-20211220-25-1xpufqm.jpg?ixlib=rb-1.1.0&rect=9%2C0%2C3086%2C2097&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-vector/young-man-on-couch-playing-games-1741034966">bang ridus/Shutterstock</a></span></figcaption></figure><p>More than 40% of the world’s population <a href="https://www.statista.com/statistics/293304/number-video-gamers/">play video games</a>. But besides being entertaining, digital games are a product. The need to bring in money from players is integral to game design.</p>
<p>A popular method of monetising games is through microtransactions. These are repeated, uncapped in-game purchases: for example, extra content, or ways to make progress in the game easier. These transactions may be made with real money or in-game currency (which is paid for with real money). </p>
<p>Microtransactions are very profitable for the industry. As fewer and fewer mobile games opt for a one-time, upfront purchase model, free-to-play games, which make the majority of their revenue through microtransactions, are proliferating. The global free-to-play mobile games market was estimated at <a href="https://www.statista.com/statistics/1107021/f2p-mobile-games-revenue/">US$73.8 billion</a> (roughly £55.4 billion) in 2020.</p>
<p>With the incentive to drive players to spend being a key facet of game design, it’s important to ask whether microtransactions are being incorporated into games in a way that might be unethical towards gamers. </p>
<p>Governments have been paying attention to microtransactions in digital gaming. One particular form, “loot boxes” (a mystery selection of random rewards), have already been <a href="https://kansspelautoriteit.nl/over-ons/publicaties/onderzoek/">banned</a> or <a href="https://www.gamedeveloper.com/disciplines/online-games-will-be-required-to-disclose-random-loot-box-odds-in-china">regulated</a> in several countries because of their links to gambling. One <a href="https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0206767">large survey</a>, for example, found the more gamers spent on loot boxes, the more likely they were to be problem gamblers.</p>
<p>Currently, in-game purchases are not subject to any specific regulation in the UK. The most relevant <a href="https://www.legislation.gov.uk/uksi/2008/1277/contents/made">existing regulation</a> that might apply to microtransactions is the Consumer Protection from Unfair Trading Regulations 2008, the aim of which is to protect consumers by prohibiting unfair, misleading and aggressive business practices.</p>
<p>Regulation is made harder by the fact that we don’t really know enough about the kinds of microtransactions which operate in digital gaming, and how they might affect players who interact with them.</p>
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<strong>
Read more:
<a href="https://theconversation.com/how-long-will-you-keep-playing-the-game-knows-82660">How long will you keep playing? The game knows</a>
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</em>
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<h2>We asked gamers about their experiences</h2>
<p>We wanted to understand what types of microtransactions players encounter. So in <a href="https://link.springer.com/article/10.1007/s10551-021-04970-6">our study</a>, we surveyed 1,104 English-speaking adults who played any one or more of 50 different mobile and desktop games. </p>
<p>We asked them what monetisation features they had come across in these games, which they believed to have been unfair, misleading or aggressive (based on the wording of the <a href="https://www.legislation.gov.uk/uksi/2008/1277/contents/made">UK Consumer Protection from Unfair Trading Regulations 2008</a>). We analysed participants’ responses by searching for repeated concepts in the data, and identified 35 problematic in-game monetisation types, which we grouped into eight domains, or themes.</p>
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<img alt="A young woman plays a computer game." src="https://images.theconversation.com/files/438460/original/file-20211220-15-13rz2t8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/438460/original/file-20211220-15-13rz2t8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=338&fit=crop&dpr=1 600w, https://images.theconversation.com/files/438460/original/file-20211220-15-13rz2t8.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=338&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/438460/original/file-20211220-15-13rz2t8.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=338&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/438460/original/file-20211220-15-13rz2t8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=424&fit=crop&dpr=1 754w, https://images.theconversation.com/files/438460/original/file-20211220-15-13rz2t8.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=424&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/438460/original/file-20211220-15-13rz2t8.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=424&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Digital games are fun – but they’re also a product.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/pretty-excited-black-gamer-girl-has-1430140205">Gorodenkoff/Shutterstock</a></span>
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<p>Some of these domains reflect practices which could contravene the 2008 regulations. For example, aspects of two of the domains – <em>predatory advertising</em> and <em>product not meeting expectations</em> – could be classified as misleading. These domains reflect perceptions among our participants that the information presented about a given in-game purchase is often incorrect, incomplete or skewed.</p>
<p>Another domain, <em>in-game currency</em>, could be seen as unfair, because it can make the implications of purchase decisions less clear for players. For example, two of the subcategories we identified under this domain included the perception that in-game currency disguises the actual price, and that multiple currency types within one game cause confusion – therefore making it harder to calculate the true cost.</p>
<p>Some of the subcategories we identified could be regarded as aggressive. For example, aggressive advertising (which falls under the <em>predatory advertising</em> domain) occurs when players are pestered to make purchases so often that it detracts from their enjoyment of the game.</p>
<p>In short, many types of microtransactions in digital games are likely to violate consumer protection regulations. </p>
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<a href="https://theconversation.com/coronavirus-making-friends-through-online-video-games-134459">Coronavirus: making friends through online video games</a>
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<p>Some domains are more subjective, yet many players still raised them as being problematic. For example, players dislike tactics such as <em>pay to win</em> because they create social division. “Anything that makes paying opponents stronger than nonpaying is unfair,” said one participant.</p>
<p>Players also value their freedom of choice as to whether to make a purchase. This is exemplified through the domain called <em>monetisation of basic quality of life</em>: when game elements which players think should be central to the game cannot be accessed without payment. As one participant explained: </p>
<blockquote>
<p>Creating an event which has 20 stages, 18 stages of which you can fulfil for free (just spending loads of your time) and for the last two you have to pay in-game currency to get the final reward. This is very very sneaky tactics. Even if you’re notified at the start of the event you still feel like you’re being robbed in plain sight.</p>
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<p>Ultimately, the general presence of microtransactions clashed with player ideas about what a game experience should be like – the so-called “magic circle” which is free from financial worries. As one participant said:</p>
<blockquote>
<p>Great games ruined by greed, I can’t even think how could a virtual, nonexistent item could cost almost like a used car. Ironically or sadly, the same company who made my favourite game is also the one responsible to have brought in this system.</p>
</blockquote>
<p>These issues would be harder to regulate than the more concrete features, such as multiple currency types or aggressive advertising, which could potentially be covered by consumer protection.</p>
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<img alt="Hands playing a game on a smartphone." src="https://images.theconversation.com/files/438461/original/file-20211220-120394-1kh16rw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/438461/original/file-20211220-120394-1kh16rw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/438461/original/file-20211220-120394-1kh16rw.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/438461/original/file-20211220-120394-1kh16rw.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/438461/original/file-20211220-120394-1kh16rw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/438461/original/file-20211220-120394-1kh16rw.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/438461/original/file-20211220-120394-1kh16rw.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Microtransactions make up a large proportion digital games’ revenue.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/closeup-man-playing-videogame-on-smartphone-516631744">Shift Drive/Shutterstock</a></span>
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<h2>So what can be done?</h2>
<p>As our research is based on self-reporting, we must acknowledge that it may be affected by biases. More research into how microtransactions affect players and their gaming experience is needed to design appropriate regulations. In the meantime, we can offer suggestions for how games companies can incorporate microtransactions ethically. Fundamentally, game play should be the same with and without payment – players must retain their choice. </p>
<p>Further, developers should not include game elements which are solely designed to get players to spend money. The value of a product must match the amount paid for it. If game designers work with researchers and players to monetise ethically, we can create a gaming industry that works for everyone.</p><img src="https://counter.theconversation.com/content/173030/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Elena Petrovskaya does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>We surveyed more than 1,000 digital gamers. Our findings suggest in-game purchases detract from many players’ enjoyment of their favourite games – and may not be fair or ethical.Elena Petrovskaya, PhD student in Video Game Effects, University of YorkLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/407262015-05-21T09:57:55Z2015-05-21T09:57:55ZNewspapers’ ongoing search for subscription revenue: from paywalls to micropayments<figure><img src="https://images.theconversation.com/files/82423/original/image-20150520-11413-1rdvlf8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Over 500 daily newspapers now use paywalls. Are they working?</span> <span class="attribution"><a class="source" href="http://www.shutterstock.com/cat.mhtml?lang=en&language=en&ref_site=photo&search_source=search_form&version=llv1&anyorall=all&safesearch=1&use_local_boost=1&search_tracking_id=oVGmnreWa5Hg88EIafRfKQ&searchterm=newspaper%20online&show_color_wheel=1&orient=&commercial_ok=&media_type=images&search_cat=&searchtermx=&photographer_name=&people_gender=&people_age=&people_ethnicity=&people_number=&color=&page=1&inline=198603977">'laptop' via www.shutterstock.com</a></span></figcaption></figure><p>It’s no mystery that newspapers are struggling to make money: between 2006 and 2014, the industry lost approximately <a href="http://www.journalism.org/2015/04/29/newspapers-fact-sheet/">30 billion dollars</a> in advertising.</p>
<p>In response, many news publishers have experimented with ways to increase digital advertising revenue through native advertising, or through collaborative models like the recently-announced <a href="http://www.nytimes.com/2015/05/13/technology/facebook-media-venture-to-include-nbc-buzzfeed-and-new-york-times.html?_r=0">Facebook Instant</a>. Still, many newspapers continue to tinker with paywalls – which require readers to pay to access online content.</p>
<p>But are paywalls viable?</p>
<p>So far the record is mixed. For some publications like The New Yorker they seem to be <a href="http://www.niemanlab.org/2015/03/after-the-archive-came-down-the-new-yorkers-revamped-paywall-is-driving-new-readers-and-subscribers/">working</a>, while other newspapers like the Toronto Star are <a href="http://www.thestar.com/news/gta/2015/03/07/note-to-readers-star-to-end-paid-digital-subscriptions-on-april-1.html">getting rid of them</a>. </p>
<p>It’s difficult to discern the exact trajectory of this moving target – especially since reliable data on their revenues are often unavailable – but there are noticeable trends. As the paywall model continues to evolve, other revenue models are emerging, including another tactic used by news publishers: micropayments.</p>
<h2>A brief history of paywalls</h2>
<p>A paywall basically acts as a barrier between an internet user and a news organization’s online content. To access the content, users must purchase a digital subscription. </p>
<p>While most newspapers only began experimenting with this model in the past few years, a longer history traces back to The Wall Street Journal, which launched the first paywall in 1997. Despite its success, general news outlets feared that launching a paywall would reduce online readership and digital advertising revenue – a tension that continues today. </p>
<p>In 2009, with newspaper revenue plummeting, a lively debate erupted over the paywall model. Publications like <a href="http://www.theguardian.com/commentisfree/2009/may/11/newspapers-web-media-pay-wall">The Guardian</a>, <a href="http://www.nytimes.com/2009/04/08/business/media/08pay.html?pagewa">The New York Times</a>, <a href="http://time.com/3270666/how-to-save-your-newspaper/">Time Magazine</a> and <a href="http://www.theatlantic.com/entertainment/archive/2009/05/shhhh-newspaper-publishers-are-quietly-holding-a-very-very-important-conclave-today-will-you-soon-be-paying-for-online-content/18409/">The Atlantic</a> published op-eds debating the paywall model’s viability. </p>
<p>Even Mark Cuban <a href="http://blogmaverick.com/2009/02/22/how-cable-satellite-can-save-the-newspaper-business/">weighed in</a>. The renowned entrepreneur and owner of the Dallas Mavericks argued that newspapers should put their most valuable content behind a paywall and partner with cable companies to offer customers a heavily discounted digital subscription rate (such as five cents per month).</p>
<p>While only a handful of publications in the US had a paywall in 2009, by 2014 – largely as a response to declining revenue – over <a href="http://www.poynter.org/news/mediawire/247555/newspaper-industry-narrowed-revenue-loss-in-2013-as-paywall-plans-increased/">500</a> daily newspapers were using one. Since then, the debate has shifted from whether paywalls <em>could</em> work to asking whether they <em>are</em> working. </p>
<h2>The empirical record</h2>
<p>After several years of trial and error, there have been noteworthy successes, along with failures. </p>
<p>In 2011 The New York Times <a href="http://www.npr.org/2011/03/17/134621239/new-york-times-unveils-metered-online-paywall">launched</a> their “metered” paywall, a model similar to the Financial Times’. </p>
<p>Metered paywalls block a reader from accessing articles once they reach a certain threshold. The New York Times initially allowed readers to access 20 articles (now it’s 10) for free each month. This model has been increasingly <a href="https://www.americanpressinstitute.org/publications/research-review/paywall-decisions/">emulated</a> because it is believed that only core readers, who are the most likely to purchase a digital subscription for unlimited access, will eventually be blocked from viewing more articles.</p>
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<img alt="" src="https://images.theconversation.com/files/82424/original/image-20150520-11413-1yuvpwj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/82424/original/image-20150520-11413-1yuvpwj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=392&fit=crop&dpr=1 600w, https://images.theconversation.com/files/82424/original/image-20150520-11413-1yuvpwj.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=392&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/82424/original/image-20150520-11413-1yuvpwj.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=392&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/82424/original/image-20150520-11413-1yuvpwj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=493&fit=crop&dpr=1 754w, https://images.theconversation.com/files/82424/original/image-20150520-11413-1yuvpwj.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=493&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/82424/original/image-20150520-11413-1yuvpwj.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=493&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">A metered paywall notice for the South China Times informs readers how many free articles they have remaining before they’ll have to pay a fee.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/clankennedy/9028948796/">Ian Kennedy/flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span>
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<p>Meanwhile, casual readers – and the publication’s advertising dollars – are not affected. These “<a href="http://www.poynter.org/news/mediawire/326073/ken-doctor-newspaper-companies-should-focus-on-news-apps/">fly-bys</a>” account for 93% of news websites’ unique visitors, so their retention is highly valued. </p>
<p>Newspapers have also succeeded in asking print subscribers to pay <a href="http://www.poynter.org/news/mediawire/141628/9-reasons-newspapers-are-suddenly-asking-print-subscribers-to-pay-for-full-web-access/">slightly more</a> for a digital subscription, while <a href="http://www.cjr.org/the_audit/gannetts_paywall_plan_flounder.php">reducing</a> its price if new customers will accept a Sunday paper. They’ll also allow readers to access articles found through search or social media even if they’ve exceeded their <a href="http://www.themediabriefing.com/article/paywall-approaches-gated-access">monthly limit</a>. </p>
<p>The Gannett Company, whose newspapers include USA Today and The Arizona Republic, implemented metered paywalls at <a href="http://www.americanpressinstitute.org/publications/reports/white-papers/10-secrets-successful-meters-paywalls-reader-revenue-strategies/">78</a> of its newspapers. In 2013, digital subscriptions added more than <a href="http://www.capitalnewyork.com/article/media/2014/08/8550225/post-spin-gannett-publishing-will-seek-acquisitions-ceo-says">$100 million</a> in operating income. </p>
<p>And in 2014, digital subscriptions at the New York Times Company earned <a href="http://www.mondaynote.com/2015/02/15/the-nytimes-could-be-worth-19bn-instead-of-2bn/">$169 million</a>. While these substantial gains are cause for optimism, they’re tempered by the fear that paywalls may only generate a temporary boost, as subscription revenue has notably stalled at the <a href="http://www.niemanlab.org/2015/01/newsonomics-how-deep-is-the-newspaper-industrys-money-hole/">Tribune Publishing Company and Gannett</a>.</p>
<p>On the other hand, some newspapers have decided to take down their paywall altogether. In 2013, The Dallas Morning News removed a “hard” paywall, which rarely allowed readers to access articles without a digital subscription. The Columbia Journalism Review subsequently declared that hard paywalls made sense for only “<a href="http://www.cjr.org/the_audit/the_dallas_morning_news_drops.php">the most essential news providers</a>” – places where readers cannot find the same information elsewhere, like The Wall Street Journal’s coverage of finance.</p>
<p>After a similar misstep – which was exacerbated by publishing some of their news content on a free website – the San Francisco Chronicle took down its hard paywall <a href="http://www.poynter.org/news/mediawire/221127/san-francisco-chronicle-drops-its-paywall/">five months</a> after its launch. </p>
<p>The Toronto Star hadn’t made such errors, but nonetheless jettisoned its paywall after growth had “<a href="http://mumbrella.com.au/toronto-star-scrapped-digital-paywall-as-it-was-expensive-and-had-a-high-churn-rate-292661">plateaued</a>” to focus on <a href="http://www.theglobeandmail.com/report-on-business/torstar-swings-to-profit-on-boost-from-harlequin-sale/article21452577/">increasing digital ad revenue and readers</a> with an improved tablet edition. </p>
<p>These cases notwithstanding, it’s difficult to predict whether a paywall will help or hurt a publication’s bottom line. Newspapers have generally been unwilling to publicly discuss how much revenue their paywall is generating, and how it’s impacting their audience size and advertising revenue. </p>
<p>Simply put: newspapers are experimenting, but they aren’t sharing the results. We only know for certain that paywalls are being implemented, that the metered model is preferred, and that the increases in subscription revenue – while substantial for some – haven’t matched losses in advertising revenue.</p>
<h2>The future of paywalls</h2>
<p>Paywalls may work as a partial solution for finding new revenue streams but the search for a better subscription model continues. In March, two new models involving “micropayments” – in which readers pay a small fee (roughly 25 cents) to read a single article – made headlines.</p>
<p>First, The New York Times, The Washington Post and The Wall Street Journal signed up to the news aggregator <a href="http://www.businessinsider.com/the-new-york-times-wall-street-journal-the-washington-post-sign-up-to-blendle-2015-3">Blendle</a>. Following the so-called <a href="http://www.poynter.org/news/mediawire/326571/new-york-times-washington-post-wall-street-journal-sign-with-dutch-itunes-for-news/">iTunes model</a>, this Dutch startup allows readers in the Netherlands to make micropayments to access individual newspaper and magazine articles from a variety of publications. </p>
<p>By hosting a variety of news publishers, both individual publishers and Blendle are hoping that individuals will be more likely to use micropayments. Think of iTunes: while an individual might not sign up to use iTunes if it were just for one record company, the fact that the largest companies are using iTunes makes listeners more likely to use the service and for companies to profit from it. </p>
<p>On the other hand, a newspaper could try to “cut out the middle man” and use micropayments on their own website. Indeed, Winnipeg Free Press, a Canadian newspaper, <a href="http://www.winnipegfreepress.com/opinion/columnists/Free-Press-to-roll-out-affordable-user-driven-access-to-news-297814851.html">recently announced plans</a> to use micropayments on their own website, making it the first North American newspaper to do so. Free Press editor Paul Samyn explained the novel decision by <a href="http://www.niemanlab.org/2015/04/the-winnipeg-free-press-is-launching-a-paywall-that-lets-readers-pay-by-the-article/">noting</a> that while newspapers have had some success with paywalls, “their ability to grow paid digital subscriptions appears to have either stalled or only grown marginally.”</p>
<p>The micropayment model has <a href="http://www.mondaynote.com/2014/11/02/the-new-york-times-and-springer-are-wrong-about-blendle/">critics</a> – as do <a href="https://medium.com/geeks-bearing-gifts/paywalls-e401eb73b348">paywalls in general</a>. </p>
<p>Unfortunately, whether any subscription model can convince consumers to pay enough to sustain the journalism that a healthy democracy requires remains an open question. </p>
<p>Since the future of commercially viable journalism hangs in the balance, the stakes are considerable. More research is needed (and more data needs to be made publicly available). And conversations should continue about what the future of digital journalism – including noncommercial models – should look like in a democratic society.</p><img src="https://counter.theconversation.com/content/40726/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The stakes are high for news outlets to raise revenue. Do paywalls have a future?Alex T. Williams, PhD Student in Communications, University of PennsylvaniaVictor Pickard, Assistant Professor of Communication, University of PennsylvaniaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/334202014-10-29T06:09:46Z2014-10-29T06:09:46ZDispelling the myth of free websites would diversify business models<figure><img src="https://images.theconversation.com/files/63002/original/kq9zwtxk-1414487621.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">'Free' – except for the data you have to hand over.</span> <span class="attribution"><span class="source">Facebook</span></span></figcaption></figure><p>You are right to worry about what internet companies do with your digital identity. There is reason to fear for online privacy. The European Union’s ruling on the <a href="http://ec.europa.eu/justice/data-protection/files/factsheets/factsheet_data_protection_en.pdf">right to be forgotten</a> is one of the more visible attempts to get to grips with the problem. Not to mention the EU’s protracted attempts to develop new rules for personal <a href="http://ec.europa.eu/justice/newsroom/data-protection/news/120125_en.htm">data protection</a>.</p>
<p>That we have to have supra-national legislators come to our rescue, however, is a symptom of the uniformity of current online business models. For some reason, we expect online services to be free, while readily paying for them offline. Most digital outfits, and all of the big providers such as Google and Facebook, thus try to monetise their online offerings through advertising income. </p>
<p>This causes many internet companies to chase the same advertising dollars, locking them into a competitive contest. Advertisers naturally prefer providers that allow them to target prospective customers most effectively. The more a provider knows about its users, the easier this becomes. So it is by design that online businesses are on a collision course with privacy.</p>
<h2>Websites are not free</h2>
<p>This trend will cause more discomfort in the months to come. An obsession with advertising-financed business models has already led to a crash once, in 2001, albeit for different reasons. Back then, as well as now, businesses assumed they could uphold the impression of a free website while trading eyeballs for ad dollars.</p>
<p>After the dotcom crash, alternative business models emerged. Amazon and Ebay were among the first online companies that earned all the money they needed from the things they sold. Since then new services have started charging directly, rather than relying on advertisements. For example, Salesforce (which offers data management services) and Skype have managed to monetise directly through customer subscriptions.</p>
<p>By contrast, other genres of services such as email, search engines (Google) and social networking sites (Facebook) have struggled to convince their audiences to pay directly for their services. A recent hoax that Facebook would start <a href="http://nationalreport.net/facebook-begins-charging-users-2-99mo">charging</a> US$2.99 per month to use from November caused quite a ruckus from users who kicked up a big fuss and swore they would leave the service.</p>
<h2>Data is a form of payment</h2>
<p>Of course, users are paying in other ways – with their data. The trouble seems to be that many of us are not aware of it, not aware of the extent of it, or unwilling to think about it. The EU’s data protection initiative is aiming to make consent more <a href="http://ec.europa.eu/justice/data-protection/document/review2012/com_2012_11_en.pdf">explicit</a>. Making the surrender of personal data an explicit opt-in process is hoped to change user behaviour as findings in the <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=405940">psychology</a> of decision making suggest.</p>
<p>Even better, label data collection as a form of payment. Users would quickly become more aware that the services they want to consume are not “free”. It would shake up the monotony of online business models. Some users will think that giving up privacy is too high a price for an email service, for example. These individuals will more likely be willing to fork out cash.</p>
<p>This opens the door for business models that monetise directly. Some new companies are already preparing for this scenario. Mobile messaging service <a href="https://threema.ch/en">Threema</a> picked up a number of new subscribers when <a href="http://techcrunch.com/2014/02/21/bye-bye-whatsapp-germans-switch-to-threema-for-privacy-reasons">WhatsApp</a> became part of data juggernaut Facebook. Email services such as <a href="https://posteo.de/site/leistungen">Posteo</a> offer privacy peace-of-mind in exchange for a fee. And apparently, ad-free social-network upstart <a href="https://ello.co/wtf/post/about">Ello</a>, which plans to allow users to buy individual service features for US$1 each, is seeing about <a href="http://www.wired.com/2014/10/ello">50,000</a> requests for membership per hour.</p>
<p>The European Union wants to go even further and mandate internet service providers to treat all customers equally, including those who do not consent to data collection. This would make sure that some people are not effectively barred from using Facebook for refusing their data terms and conditions. But this would be tricky for Facebook as the service then becomes truly free. Instead, the company would be better served by being permitted to charge those customers who do not want to share data.</p>
<h2>Your data or your money – you choose</h2>
<p>Providing users with a clear choice – “If you want to pay in cash, tick here. If you want to pay in data, tick here” – would offer much-needed room for differentiation in highly competitive industries while simultaneously alleviating the data privacy dilemma.</p>
<p>The industry would then go through some reorganisation. Smaller service providers will be the first to look for alternative ways of monetising (if only a fraction of a limited user-base decides to share its data, advertisers will turn away). Many will charge users directly for their services, but there are other options too.</p>
<p>Platforms such as code repository <a href="http://www.wired.com/2013/09/github-for-anything/all">GitHub</a> and career network <a href="http://files.shareholder.com/downloads/ABEA-69T44N/3567421169x0x764703/5FF0150D-96B8-4F6D-8DC5-6AA983254CBF/LinkedIn_2013_10-K_Web_Optimized.pdf">LinkedIn</a>, for example, show how a few premium customers can subsidise everyone else. Others such as Tesco or Amazon use device sales to <a href="https://theconversation.com/technology-firms-need-new-strategies-as-the-purpose-of-devices-changes-31815">subsidise</a> their online services. </p>
<p>As some firms opt to move away from advertising, the firms that decide to retain the ad-based business model will be able to take in higher revenues, since competition in this space will have reduced to more sustainable levels.</p>
<p>Conspiracy theories abound as to why the 2012 EU proposal has not been enacted yet, or how it <a href="http://www.dw.de/power-struggles-delay-eu-data-protection-reform/a-17631222">might look</a> after consensus is achieved. But if paying with data does indeed become an explicit opt-in requirement, expect the world of online services to change for the better, for both users and providers.</p><img src="https://counter.theconversation.com/content/33420/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Ronald Klingebiel researches and advises companies in the telecommunications and high-tech industries. His work attracts support from both corporate and government funding sources.</span></em></p>You are right to worry about what internet companies do with your digital identity. There is reason to fear for online privacy. The European Union’s ruling on the right to be forgotten is one of the more…Ronald Klingebiel, Professor of Strategy, Frankfurt School of Finance and ManagementLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/305912014-08-19T05:17:53Z2014-08-19T05:17:53ZThe Premier League’s video clampdown is another struggle to monetise social media<p>As a new football season starts, the Premier League has stated its intent to stop fans from posting unofficial videos of goals online. The <a href="http://www.bbc.co.uk/newsbeat/28796590">Premier League has pointed out</a> that the videos of goals and other match highlights, which get shared on social media, is copyrighted and therefore illegally uploaded.</p>
<p>This isn’t a new problem – the internet has changed viewing habits forever. The increasing number of people watching live broadcast events <a href="http://www.econtentmag.com/Articles/News/News-Feature/From-the-Olympics-to-the-World-Cup-Sports-Go-Online-97602.htm">through mobiles and tablets</a>, especially among certain demographics, is a rising issue that broadcasters must address. But as well as presenting them with a challenge, it also presents advertisers and broadcasters with an opportunity to capitalise on the changing market and habits of viewers. </p>
<p>The 2014 FIFA World Cup broke online streaming records around the world with <a href="http://www.fifa.com/aboutfifa/organisation/news/newsid=2401405/">5.3m unique viewers</a> watching at peak viewing. So, the challenge for broadcasters is how to maintain a compelling media experience, while monetising the events to get the return on the investment that they have paid for the TV and online streaming rights of these games. </p>
<p>Broadcasters have their own mobile apps and websites where subscribers can officially stream services. But they are competing with alternative social media platforms like Vine, Snapchat and the established Facebook, Twitter and YouTube, where members of the public can upload content illegally that’s free for the non-paying public around the world to watch. And so broadcasters are trying to muster their contractual and legal clout to manage the violations of recorded videos posted on websites such as Vine. </p>
<p>The issue is an old one in internet terms of where copyright material that is shared through a social media or a search engine is violating the original broadcasters terms and conditions. You can post links to official streams and you can list and search video clips, but this breaks down when copies can be put on sites such as Vine that specialise in momentary clips for sharing. </p>
<p>But does a short 15 or 30-second looping clip constitute streaming a game or providing a video service? It’s difficult to see – especially from a fan’s point of view – how this is intended to violate copyright, rather than the social network experience it is typically intended to foster. </p>
<p>It’s ironic that where the digital world, which disrupted the traditional business model, is now in effect disrupting itself through alternative digital platforms competing with each other for for the online viewing and social media public.</p>
<p>The two root issues that remain are the open nature of social media platforms and the challenge this creates for copyright content that prevents its widespread usage. Another is the impact of virtual business where, like the Uber taxi service, the digital world can empower anyone to be a broadcaster or a business without any physical or commercial attachment. </p>
<p>The monetisation model in the digital world is potentially at odds with the traditional model that was based on legal contracts. Traditionally, content rights were negotiated and paid for upfront by a media company that then controlled that content. The new online world, however, is driven by the here and now, with real-time social interactions being exchanged “live”. </p>
<p>It’s a world of difference in many ways from an upfront and static contract model that seeks to direct viewing traffic towards itself. This kind of managed viewing control by providers of content is a different social dynamic to the control given to social media consumers who often see it as their right to choose who they contact and what they want to see and do – with no binding contracts. </p>
<p>Mainstream broadcasters will struggle to prevent this so long as their sites are not integrated with social media websites. The problem and opportunity is that the barriers to entry for providing and capitalising on these services and switching between them are very low in the cyber world. Consumers can just click to another platform as and when they like.</p>
<p>But we are still in the early days of the multimedia social world and these battles will rumble on as digital platforms seek to own parts of the user experience and the monetisation models from this. Meanwhile traditional media will seek to maintain as much ownership and rights as possible.</p><img src="https://counter.theconversation.com/content/30591/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Mark Skilton does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>As a new football season starts, the Premier League has stated its intent to stop fans from posting unofficial videos of goals online. The Premier League has pointed out that the videos of goals and other…Mark Skilton, Professor of Practice, Warwick Business School, University of WarwickLicensed as Creative Commons – attribution, no derivatives.