Analysing Digital Culture 101: Online Business Models

Foreword

Nowadays, media are so present in our everyday life that we tend not to notice their influence and power anymore. Because of this, the Analysing Digital Culture series explores the key approaches to the analysis of new-media and reflects on their social and cultural significance from different theoretical perspectives. The series touches on some of the most popular debates on digital media such as their economy, their emancipatory and limiting power, the content recommendation systems, the circulation of memes and viral content, and the selfies culture.

Analyzing Digital Culture 101 will be divided into the following chapters:

1. Digital Culture 101: The Impact of New Media

2. Digital Culture 101: Media and Democracy

3. Digital Culture 101: Online Business Models

4. Digital Culture 101: Recommendation Systems

5. Digital Culture 101: Cultural Meaning of Memes

6. Digital Culture 101: The Attention Economy

Digital Culture 101: Online Business Models

Benkler (2006) is a writer and professor of Entrepreneurial Legal Studies at Harvard Law School. In his book titled The Wealth of Networks (2006) he explains that information, knowledge, and culture are fundamental for humans to be free and for society to develop. As a result, also the way information, knowledge, and culture are produced and exchanged deeply affects us. Benkler (2006) describes how with the implementation of the Internet the organization of information underwent a radical change and with this also economy, society, and culture changed. As for the economy, nonmarket and nonproprietary productions acquired a central role. This means that in the new economy, products can be made and distributed by everyone, without someone owning them or earning from them (Vocabulary.com, 2023; Cambridge Dictionary, 2023). Benkler (2006) defined this new economy “networked information economy”, which is more commonly defined as sharing economy (John, 2012). Barbu et al. (2018) are academics specialized in business, marketing, and administration and they explain that the shift from an economy based on ownership to the current one based on sharing goods and services can be considered a proper paradigm shift. The researchers also claim that this shift also had a great impact on customers' mentalities and behaviors (Barbu et al., 2018). Consequently, it is important to understand which are the dominant online business models impacting the platform–user relationships, the currency, and the possible societal problems of this new economy. These ideas will be explored by making visible the business models of the free and sharing economy and reading the Terms of Use, also called "small print", of some of the most known and used platforms of the internet.

The Sharing Economy

John (2012), professor of communication and journalism at The Hebrew University of Jerusalem, explains that the verb "to share" was given a completely new meaning with the expansion of Web 2.0 and social media. Before that, the meanings it was associated with were "to distribute", "to divide", or "to communicate" when talking about feelings or emotions (John, 2012). With social media platforms and their "share" button, this verb acquired the meaning of “bring[ing] the page to the attention of others” (John, 2012, p. 46). For this reason, John (2012) describes the act of sharing as “the word that describes our participation in Web 2.0” and its economy. The scholar describes the sharing economy as being characterized by the secondary role of monetary compensation. This means that money and profit might be involved eventually, but they are not the primary factor that motivates the collaboration of programmers and the participation of users. Additionally, Benkler (2006) explains that except in certain cases, generally platforms in Web 2.0 are the result of peer collaboration and the users’ participation cannot be justified by the presence of a price or a future reward. For this reason, in addition to nonmarket and nonproprietary, the new economic model of the sharing economy has also been described as commons-based peer production (Benkler, 2006). This means that the producers share their resources and cooperate without answering market demand or following managerial commands.

Figure 1: The process of sharing data on social media (n.d.).

Benkler (2006) adds to the debate that according to late-twentieth-century American institutions, it would have been impossible to get thousands of volunteers (users and programmers) together to develop such a complex economic project. John (2012) provides two explanations for this. First, he explains that this great change in the economic history of the world was made possible by the new technological conditions that allowed people to participate in the sharing mode of production with very little investment—a computer and Internet connection (John, 2012). Secondly, he highlights the therapeutic narrative constituting the basic idea of the sharing economy (John, 2012). In Web 2.0, many platforms such as social media enhance the possibility to share our emotions with our beloved ones to encourage participation (Zuckerberg, 2017). By doing this, they promote the contemporary idea of a healthy relationship according to which we should share more about our feelings and thoughts, so be more open and not hide secrets (John, 2012). This has been often criticized for polluting the quality of content in both social media and television because it often ends up in over-sharing (Arceneaux & Weiss, 2010; Illouz, 2003). Nonetheless, one of the most powerful tech giants in the world, Facebook, developed its social media around the therapeutic discourse according to which sharing all sorts of information creates intimacy (John, 2012). This keeps stimulating users to share their everyday life more and more while the platform benefits and profits from enormous amounts of data (Barratt, 2019).

In the sharing economy, John (2012) distinguishes two different business models: the sharing economy of production and the sharing economy of consumption. The sharing economy of production consists of operating systems outside the capitalist market economy that aim at producing useful content (John, 2012). The writer explains that platforms performing this type of economy are usually employed by their users to share something they have in common with other people using the platform such as knowledge or time (John, 2012). The sharing economy of consumption, also defined as “collaborative consumption” by Botsman and Rogers (2010), who are experts in the New Media field, consists of an organized sharing, renting, and swapping of goods [Figure 2]. Tham et al. (2022) are business experts who discuss in their paper how this part of the sharing economy involves making a profit more often than the sharing economy of production. This business model produces the same satisfaction of ownership but with reduced costs, since the goods on the platform become shared yet commonly owned (Botsman & Rogers, 2010; John, 2012; Barbu et al., 2018).

Figure 2: Collaborative consumption (n.d.).

Wikipedia & Airbnb

Wikipedia and Airbnb are two very different platforms globally known and used that present the two business models described by John (2012). Wikipedia describes itself as a "nonprofit charitable organization" that aims to "collect and develop content under a free license or in the public domain, and [...] free of charge" (Wikipedia, 2019). This means that every user is free to share, modify, or add information for free. This platform was created to accumulate, order, and link all the knowledge in the world. For this reason, it is organized in a sharing economy of production, in which users contribute to adding information, not for financial compensation but to provide something valuable for the entire community. In fact, as the Terms of Use state: "the community contributes and helps to govern our sites." (Wikipedia, 2019). Consequently, Wikipedia is radically decentralized, so without authority, since it only "provide[s] the essential infrastructure" needed because the "editorial control is in the hands of you and your fellow users" (Wikipedia, 2019). This also means that all information is non-proprietary and solely collaborative (John, 2012). This philosophy lets the user be a "reader, editor, author, or contributor" (Wikipedia, 2019) according to their needs, and mostly, it makes them part of the Wikipedia community. This example shows that in sharing economies of production, such as Wikipedia, users are essential for the development and enrichment of the platform. As a matter of fact, these platforms would not exist without their users because the creators have a more marginal role after their creation (Wikipedia, 2019).

A different business model is used by Airbnb, an "online marketplace" ruled by a sharing economy of consumption (Airbnb, 2019). The word itself suggests that in this case, a product like a spare room is being shared and consumed by someone, and whoever owns it receives monetary compensation. The role of the company here is to offer a meeting point between the demand and the offer (Airbnb, 2019) [Figure 3]. In fact, as it is explained in the Airbnb Terms of Service, "when Members make or accept a booking, they are entering into a contract directly with each other" (Airbnb, 2019). However, Airbnb charges a variable amount of money to both host and guest as service fees for their use of the platform. John (2012) explains that this kind of economy is about "sharing stuff that we own" or "enjoying shared access to a commonly owned good" (John, 2012). For these reasons, the relationship between the platform and the user is different from the one in Wikipedia. In fact, as specified in the Terms of Service, the user's "relationship with Airbnb is limited to being an independent, third-party contractor, and not an employee, agent, joint venturer or partner of Airbnb for any reason" (Airbnb, 2019). By specifying this, the company exempts itself from any responsibility for the kind of exchange that happens through the platform. The example of Airbnb shows that platforms with a sharing economy of consumption have been created to provide a service from which the creators of the platform and the owners of the shared goods profit.

Figure 3: Airbnb's business model (aPurple, 2020).

Data Currency

In the first years of 21st-century fitness apps, medical apps, patient experience, exchange platforms, and health monitoring platforms underwent great growth, therefore Van Dijck and Poell (2016), new media authors and professors, analysed them as technologies and as new economic models. In their analysis titled "Understanding the promises and premises of online health platforms" (2016), they explain that these apps promise to improve their users’ well-being by working as “personalized data-driven services to their customers” (Van Dijck & Poell, 2016). At the same time, the apps also claim to serve the public interest and improve medical research and education (Van Dijck & Poell, 2016). Van Dijck & Poell (2016) claim that all health platforms present such promises which he describes as double-edged. The professors explain that these platforms are actually testing how a data-driven platform society should be structured. Since the article was written in 2016, it could be argued that we have already reached this type of society. As a matter of fact, today not only health apps but most of the platforms on the Internet include what Van Dijck and Poell (2016) define as datafication and commodification mechanisms. With the term datafication they refer to the process of turning into valuable data every action users make or information they insert on the platform; the term commodification is used to address the mechanism that transforms datafied information into monetary worth (Van Dijck & Poell, 2016). This agrees with Barratt’s (2019) claims about the fact that data has become a proper currency. In an interview done in 2019, she explains that the difference from money is that the economy they are used in is one-sided because only those who trade them (platforms’ creators and owners) get profit, while those who produce them (users) are exploited to consume more through personalized adverts (Barratt, 2019). This contradicts Benkler (2006) and John (2012) who described the sharing economy as including monetary exchange only in certain cases.

Another important aspect of the sharing economy regarding the sharing of data that Van Dijck and Poell (2016) discuss as related to health apps, is the new boundary between private and public. As John (2012) explains in his article, the sharing economy and more specifically social media, apply a therapeutic discourse that encourages users to share as many details as possible about their lives. Despite the sharing of personal information being done by the users consensually, Van Dijck and Poell (2016) raise some questions regarding their privacy [Figure 4]. They explain that apps collect users’ data to sell them to industrial partners and other companies that address users with personalized advertising in order to increase their sales (Van Dijck & Poell, 2016). Despite companies having always collected information to address advertising to more suitable and interested customers, it becomes more problematic if we think of all the information contained in our phones or computers. The reporter for the Guardian Australia Touma (2022) explains in one of her articles that a security tool called InAppBrowser.com showed the surveillance capabilities of TikTok. The journalist claims that the tool demonstrated the app’s “ability to monitor all keystrokes, text inputs and screen taps, which could include sensitive personal data like credit card information and passwords” (Touma, 2022, p. 1). She also explains that this does not imply that the app is actually doing all these things. However, what kind of data it collects and how it transfers them remains an enigma for everyone (Touma, 2022). Because of this, as Van Dijck and Poell (2016) claim, “there is a growing divide between those who have access to, and control of, data flows and those who have not.” This means that those who collect and hold this information have great control over those people who do not, and this can be the government but also a private company (Van Dijck & Poell, 2016).

Figure 4: Data and Privacy (2020).

Conclusion

In the sharing economy, the verb to share acquires a completely new meaning to make visible to other users a piece of information or a web page (John, 2012). In the beginning, this new type of economy was characterized by the secondary role of monetary profit since its platforms have been developed thanks to the peer collaboration of programmers and the free participation of users (John, 2012). This was made possible by the therapeutic narrative expressed by the platforms according to which the more information users share, the better (John, 2012). Both John (2012) and Benkler (2006) recognize two common types of sharing economy: the sharing economy of production of Wikipedia, and the sharing economy of consumption of Airbnb. An additional important aspect of this economy is its completely new currency: data. Especially since social media platforms profit from collecting and sharing data with third parties (Van Dijck, 2016; Barratt, 2019). This raises important questions about users’ privacy that seems to be undermined by this new sharing economy.

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