, Episode

Lior Zalmanson on why people pay for online content

Interview by
August 3, 2021

In this episode...

Lior Zalmanson, a new media artist and an assistant professor at Tel Aviv University, researches the business models that underpin online content. Today on POWER PLAYS he shares brand-new research into how small creators on platforms like Patreon and YouTube have monetized their work. He finds, contrary to popular belief, that a content creator having a personal connection with a consumer has a detrimental impact on whether they make a financial contribution to their work or not. There's a few caveats to that statement, so make sure to listen to this conversation in full to hear his more nuanced take!

Lior Zalmanson

Lior Zalmanson is an assistant professor at Tel Aviv University.


This transcript has been lightly edited for clarity.

Intro [00:00:07] You're listening to POWER PLAYS, the podcast hosting conversations between policymakers, engineers, business leaders and others who are influencing the Internet infrastructure and institutions in ways that impact all of us today. Here's your host, Ayden Férdeline.

Ayden Férdeline [00:00:29] Welcome to POWER PLAYS, presented by Grant for the Web, I'm Ayden Férdeline. Today on the show we have Lior Zalmanson, a new media artist and an assistant professor at Tel Aviv University, where he researches the business models that underpin online content. That is going to be the focus of our conversation today. But before we get into that, Professor Zalmanson, a very warm welcome to POWER PLAYS, and a question that I always ask guests on this show is an icebreaker, and that is what is a contrarian thought that you have about business or culture that others might disagree with you on?

Lior Zalmanson [00:01:07] It's a very hard question, but thank you for challenging me on the first minute. And I think my answer will be that we should pay for the social platforms that we use, meaning we should pay for Facebook and we should pay for Instagram and for TikTok and all of the rest. And I think, unfortunately, that free culture that in the beginning at least helped a lot in democratizing culture, in raising important societal and social topics, also takes a toll, sometimes in the form of abuse and use of free labor that we will probably talk about later, but also in terms of fake news, also in terms of populism. So I really think we should take charge and take back the control over the platforms that we use. And the best way to do so is by actually paying, by actually becoming their consumer, their customer, their paying customer.

Ayden Férdeline [00:02:22] It's very interesting that you mentioned that. There was a guest that we had on POWER PLAYS recently, Professor Nathan Schneider, and he had a very similar view to you. So maybe it's not all the contrarian actually. He was speaking to us about what he calls platform feudalism and about how he's really into this idea of cooperatives forming or some kind of alternative governance model or alternative economic model being able to fund smaller platforms that can potentially emerge to solve some of the issues that we are facing in society at present.

Lior Zalmanson [00:02:56] Yeah, I was following Nathan's work for quite a while. I think I also heard him I think a few years ago in one of these conferences back at the New School in New York. And yeah, we are very much similar in some of our views. But maybe I'll go back in saying that I've been basically looking at the idea of free content and business models for content for more than a decade now. And if you would have asked me what was my contrarian thought a decade ago, it was that people will and should pay for content and we've seen that manifest itself over the last decade. More and more people pay for, at least for the platforms who deliver some of the content, like Spotify, like Netflix, not necessarily for the smaller content creators. But I think going into the next decade, I think this should also be the case for what has been until now a free business model or an ad-sponsored business model, and that goes for Facebook and similar websites.  

Ayden Férdeline [00:04:04] We're going to come back to many of these topics later in our conversation. However, let's set the scene a little for our listeners. What do you research and why?  

Lior Zalmanson [00:04:13] Yeah, and maybe who am I? Who is this person you are listening to? So just a bit about myself. I'm a professor at Tel Aviv University. I've been researching digital content, online content, and specifically, I would say online behavior, engagement, commitment and trust with websites and the content that is on those websites for, I think, 13 years now. I've been very, very much not a digital native necessarily, but maybe an Internet kid. So I received the internet in '93 and I was, I think, a bit younger than a teenager. And I really grew as a 90s kid on the Internet. And I really enjoyed the culture of what is now known, or what was known, as Web 1.0, the idea of  free culture. And it was  less commercial in the sense it's more creative, but nobody really makes a profit. And then I've been very much a part of the social media movement in the sense that I've been looking at it and researching it since it was born in the 2000’s and a bit. I knew back at the day that I'm really interested in these situations, the social situations that happen online, that mix between, let's call it the social and the communal and the transactional or the economic. So these scenarios in which those two sometimes contradicting values have created these tensions and then you need some solution, because things cannot stay free. We can be communal as long as we want, but we also need to make some sort of living, some sort of value capture if I take more business lingo. So in that sense, I am a business school professor,  I am interested in making things sustainable in terms of its business value, making websites last, making content creators more, I guess, also sustainable in that sense. I've been interested in these situations from a very personal motive. I was just so much part of it. I was a creator myself. I'm also an artist. I've written for the stage and the screen. I know all about what it is, giving your content, giving your art for free. So I couldn't just sit and do nothing. And I felt research as something I was very interested in. And this is something I related to the most.

Ayden Férdeline [00:07:08] I'm curious, do you think that a consumer of online content, so not a content creator, just someone who is consuming online content, do you think it is important that consumers understand the business models of the creators whose work they are consuming?

Lior Zalmanson [00:07:22] So it reminds me of a book by this media theorist you probably know, Douglas Rushkoff. He has written a lot about media online, is a brilliant guy, brilliant professor, and he has this small booklet called Program or Be Programed. And I think it's very much worth the read and it's very much worth the, you know, the all basically, the ‘do’ , in the sense that as a consumer, as even as a passive consumer, it is more than just worthwhile to understand business models online. It is essential ethically. It is essential to the way we conduct our lives. Because if you are not aware of how websites are being programed, then in a sense you are being programed, right? If you don't understand the recommendation algorithms, for instance, if you don't understand the idea of these data driven websites that collect data on you, or the notion of ad networks that show you, you know, people are always surprised when they see these, they just search and then they see everywhere they search online, no matter which websites they enter. And this is just a gap in the literacy, in the literacy of understanding these business models, which I worry cause a lot of damage. So in a sense, yes, I do believe that we should all be aware of who makes the money, how this money is being made, who pays the price as a society, but also as individuals.  

Ayden Férdeline [00:08:58] I want to turn now to some recent research that you've been conducting with the support of Grant for the Web. You've been conducting a series of experiments to study the effects of a micropayment counter on the attention levels of users, their length of engagement, retention and many other variables that I'm sure you'll explain. What was the overarching research question that you've been exploring and what have been some of the early findings that you have had so far?

Lior Zalmanson [00:09:26] This research question that was supported, as you said, by Grant of the Web, and it's a research I've been conducting with the Dr Denisa Reshef Kera. And we both have been looking at the question of the visibility, you can also call it transparency, the amounts of either money going into this project or received, the amount of money that this content has been receiving, or the amount of time. So in other words, maybe I'll try to make it much more simpler and say that it's about the visibility of the resources, that went into (making) this video and the resources received by the video, received by the content creator related to this video. So how much money he made out of it, how much time people spent watching it, how much people have been watching it in general? So the question is, do you need to make this transparent to future viewers? Is it worthwhile for the solo content creator to be very transparent, to be very open about the data related to this video in terms of resources in or out? Specifically, the most interesting factor was the money. Should we be open and frank about the amount of money we already received from our community for this video? And this is a debate that we've actually seen at the beginning, happening at websites like Patreon. So in Patreon, they have this dilemma about openness. Right? So you can ask for a money contribution, but you don't necessarily have to state how much money have you been already receiving. And people, I mean creators, they worry, and very understandably so, that there is a threshold that if you cross it, people will not be interested in paying you no longer because you're rich enough, so to speak. Right? So if you already have enough contributors, enough donations, it might not be beneficial for you to be fully transparent about it. So our early research actually sort of verified that point. So people maybe unsurprisingly, they have some mental accounting and they are to some degree calculating if you had enough. So the conclusion, the takeaway should be that when you begin and when you actually need, you should definitely be very transparent about it. But once you're quite successful, even mildly successful, sometimes it's not worth actually giving away the amount of money. However, we were also interested in instead of asking or telling you about the money, we'd be telling you about other resources, say time. And time and money relate to different effects, right? So some people don't relate to the amount of time people given you as they would to the money. And this is also true about money as input. So if you say, for example, this video cost me $200, help me sponsor it, versus this video cost me two days worth of my time, help me sponsor it or something like that, that will elicit different reactions, different effects. And I'll give you a spoiler to our audience and say that we found basically that time elicits better responses in that sense. So when we approached what we call inequality matching approach, meaning that it's kind of like tit for tat. So I paid all this money for this video and you've been watching it. So it's only fair that you'll help and contribute. This is not always a successful strategy, but if you speak about time and you mention all the time you invested in this video, but you ask for money, that is actually more successful in our experiments, because I think in that sense it's a less of a transactional type of communication and more of a communal donation, goodwill type of interaction with your audience. So, again, not necessarily a surprise, but I have to admit that we weren't very sure from the beginning. We didn't have a clear hypothesis of what effect will win.

Ayden Férdeline [00:14:18] That is really fascinating. And I know that you touched upon this a little just now. But can you elaborate on what you mean when you say that content consumers, when they believe someone has, quote, enough, end quote, resources? What do content consumers understand this to mean, or rather, what is it that consumers think it means to have enough resources? Is this the content is being produced in a cost neutral way and the creator has enough to cover their production costs? Is this, the creator has earned enough to live on, to be able to do this work full time? Maybe it has a different meaning altogether.

Lior Zalmanson [00:14:55] That's a great question. And the answer, even though I can very honestly admit that I don't feel my research, our research, delved enough into that question, that can basically we could spend like a full year just researching that specific question. But from what we've seen, being paid enough means that you have more money than I do. Right? So for the amount of money that I feel that you spent on this, for instance, you made more money that I make for my time, like you've got paid more for your hour, then how much I get paid for my hour, which could actually be quite low, because, frankly, we've used in our research mostly gig economy workers and gig economy workers, unfortunately, are underpaid almost as an unwritten rule, unfortunately. So for them, even telling them that this content makers made a few hundreds of dollars and asking them to give a dollar. It's like, why should I? Like he already has $200. This probably took him like two hours to make and it doesn't make any sense to them. So it's always about comparing yourself to them, comparing the amount of money you have to the amount of money they have. I think this is key and it doesn't have anything to do with how much energy, creative effort went into this in the end. So it's not about your value for them. It's much more about this mental accounting.

Ayden Férdeline [00:16:39] That makes sense. I'm curious, just in terms of the methodology, from what languages and geographic regions did you collect your data from?  

Lior Zalmanson [00:16:49] Um, yeah, we've decided to focus mostly on the US. That's where most platforms are. That's where our gig economy website is. It made more sense.

Ayden Férdeline [00:16:57] Something else that you mentioned that I found very interesting was when you were speaking about money as input, that this can be seen as a sign of showing support to someone. And it reminds me of the discourse lately around Substack, the publishing platform, and how one way that some people feel comfortable expressing sort of a political allegiance towards a cause is by financially supporting certain creators that they like. And then the rhetoric that I've started to observe in the mainstream media takes two forms, one is the rise of the grifter economy. That there are pundits who are paid, in the evaluation of some, outrageous amounts of money to express views that they dislike. And then there's the opposite view, that you know, this is a sign of support. This is showing that this is where the silent majority really are on these issues and that there is a market for this. One example of this would be Glenn Greenwald, who is making two million dollars on Substack, and he's been on that platform for, what, six months if that and his supporters and detractors alike both turn to his volume of contributions to either conclude that, one, cancel culture is not real or two, to deduce that woke-ism is a fringe issue?

Lior Zalmanson [00:18:14] So that's a brilliant example. So I'm glad that you brought out Glen as an example because it started. So my fascination with it sort of also started with this person was like our Israeli Glen Greenwald. She's like a human rights fighter and she is very gonzo journalism type person, goes into with her camera and goes into all these fights with authority. And she gets paid each month by her fans, by her followers, by her donors. Something sthe equivalent of, I would say twenty to thirty thousand dollars, as a monthly wage. Now, justfor a comparison. This is, I guess, like 10 times maybe journalists will make in Tel Aviv or at least five times, if not more so. So in that moment, I was like, should I support her or shouldn't I? Like on the one hand, yes, I support her work. I feel like what she's doing is super important. I enjoy her work. So maybe ethically I should pay. But then again, her counter displays this very, very high, high amount of money she already receives and she actually makes way more money than I do. Glen makes way more money, I guess, from both of us. Right. So should we, with our less substantial amounts, give out to Glen, who is clearly not in need anymore? That's a major question, I guess. That's actually what we try to capture and at least ask people in the gig economy. They seem hesitant to contribute to people who already have such high funds. But I have to admit that our research actually focused on the first encounter or a relatively short encounter with content. So not necessarily somebody you already like and follow for a long time. Not this pundit example, but actually looking at like just content creator you enjoyed in the last few minutes. So there is a difference in that sense.

Ayden Férdeline [00:20:33] Before we move on, perhaps we can look a little deeper at the initial stage of your research, from what I understand, you identified five types or five categories of content consumers, and each of these users had a different reason for paying or not paying for content. Can you explain who these content consumers are?  

Lior Zalmanson [00:20:54] OK, so we have five, as you mentioned, and I'll try to go one by one. So first we had customers, people whose relationship with the content maker is very transactional and they can assess how much money they are interested in giving based on the valuation of the content's worth. They make all this transactional and again, as I mentioned, mental type of accounting. So they are customers in that sense. This is about what anthropologist named Fiske wrote as market pricing, the idea of like finding the right price and defining a relationship by this transaction. And so customers are just one type. The second type is like Patrons, more of like admirers of content. I look up to this person, I pay them as a Patreon for clear admiration. It doesn't include this transactional thinking. It doesn't include this tit for tat, is it worth it? Is it not? It's just like an overall admiration. We had freeloaders, which may be not the nicest name maybe it's more like the free riders. This is the most like the name for people who do not believe content is worth paying for online, no matter what, they really are firm believers that platform should pay content economy and they don't need to be on any side of it. Even though they watch the content, they enjoy the content. And then we had philanthropists that are more of like they just want to help this content maker, it's something that is even more communal than being a Patron, and it can also be a bit patronizing, right, because it sometimes frames this content creator as really someone in need. That's not sometimes always equal playing ground between the two. And then the equal playing ground case. We call it  peers. So it's much more of an equal type of relationship. Well, yes, you admire to a degree, but really, you just see both of you as peers in the same community and you want to be part of something. You want to just help, but usually in a more moderate way. This usually is associated with a smaller donations amounts and actually was less frequent in our survey. So the most frequent was, of course, almost half didn't want to pay anything, but half usually end up paying something and those were either the customers or the philanthropists. So either you are, like, fully social about it or you are sort of transactional economic about it.

Ayden Férdeline [00:23:53] And do you verify if someone makes a payment or are you relying on self reported data here?

Lior Zalmanson [00:24:00] OK, so (there was) this change throughout the experimentation. In the first few (experiments), it was just hypothetical, it was just how much you would pay? And then we felt we are not content about this as being ideal, you know, an ideal methodology, ideal design. It's not a true answer, maybe because maybe they're just trying to look more generous. And then in the last few experimentations that we haven't published yet on the website, we started asking them to share with us the money that we gave them. So we pay the people for the experimentation:we pay them a certain amount and then we pay them an extra bonus. And that bonus they can share between themselves and the content creator that they viewed (as part of the experiment). And funny enough or not, funny enough, interestingly enough, they on average give half of it to the content creator. So we were kind of surprised by it because those are people who actually need the money. Those are people who joined the research because they work online. For them, it's work. And we were very surprised to find that they are willing to let go of half of their bonus earnings for this person, who they just watched their video for the last few minutes. But they don't know personally. They don't know who's behind this or anything.  

Ayden Férdeline [00:25:28] That really is fascinating to me. I'm going to quote now something you've wrote in a report on the second stage of your research. You said, quoting, impersonal messages, claiming that the video is supported by a community or has a clear market value, elicited more money contribution than more personal tone and request for money by the content maker, end quote. That, to me, was a really interesting finding because this idea that the creator having a personal connection with the consumer of their content seemingly has a detrimental impact on whether they make a contribution or not, not something I would have guessed.

Lior Zalmanson [00:26:07] So the caveat in that sentence is that it acts differently when we talk about time. So that sentence is true when we talk about the money as the thing that is being revealed in the counter. So, for instance, if you say, as I mentioned, if you give a personal plea and you say, listen, this website, this video has cost me two hundred dollars, give me back or help me or support me so I will make ends meet. We found this a bit less effective than if we just have this counter that is more of a social proofor, as you mentioned, a market offer. So what is a social proof? A social proof is like saying two hundred people gave a dollar to this video. This video has made two hundred dollars. But it didn't make two hundred dollars because of some personal plea for help. It actually made it because a lot of people thought it was worth their time/money in this case. And the other part of that sentence that you've read mentioned that instead of a personal appeal, actually, we found that a transactional appeal, when he talks about money. So when you mention money, sometimes it's worth reminding people what you will give in return for this money, for instance, this money will help me provide exclusive content. So people, for instance, join Patreon and pay for these exclusive content offers, so they want more videos in return. They want some sort of a transactional return. But, and this is the second part of the research, when we talk about time, we found, for instance, that this trend changes a bit. So in that case, actually giving a personal appeal is actually quite strong, meaning that, again, if you say I invested all this time into making this video, please help me. That is actually very much more in tune with eliciting payments from consumers, from your fans. That helps a lot. I can tell you the strongest finding that we had, in terms of statistics, is what clearly seemed to not work is showing you some hierarchy, showing you something like, this person has so many fans and so many viewers. So any counter that stressed the hierarchy, meaning that this person is already famous, this person is already successful. So this, again, sort of echoes a previous finding that if this person has enough or he or she has more than you, then you don't feel you need to contribute anymore. You don't feel you need to help in any way or manner. So that we can attest for sure. But yes, there is a difference between time and money and there is some sort of calculation going on. So this was a lot of results. So I don't know if it made sense of it all.

Ayden Férdeline [00:29:38] Thanks. I'm curious about that calculation. And perhaps the data doesn't answer this question, but I'm going to ask it anyway. Are people happy to pay for content from people who look like them? Same political ideology, live in the same state, same gender or sexual orientation, ethnicity, that kind of solidarity, or are people happy to pay creators who don't quite look like them?

Lior Zalmanson [00:30:03] OK, so we haven't seen in this specific study, any sort of proof for people preferring to pay to people to look like them. The specific video that we showed them, the ethnicity of the blogger was he was a black man, but we haven't seen this as one of the covariants that had a significant effect on payment necessarily. However, I have some previous research that I have conducted with Efrat Nechustai, who is now at GW, but was previously at the Columbia Journalism School. And we looked at payment to newspapers basically at Trump era. And we definitely see that Democrats or blue leaning voters tended to support, unsurprisingly, tended to support the pleas of newspaper and newspaper use more of these, I would call them communal pleas )and ) not the transactional types, that meaning that they you know, they said something like, we are the voice, we are the free speech or we are the place of democracy. We save democracy. Those kind of pleas really appeal to Democrats at the time of Trump and really made New York Times or Washington Post conversion rates go up and up and become most successful, at least in the recent years. So in that sense, yes, I feel like social media. I feel like the content economy has this attribute that you mentioned of people helping their pundits, helping their social causes rally around. Yeah. Either causes that they like, political movement that they support. I don't think it's that surprising. That is actually one of the things that I like most about the Internet, the idea of democratizing that sort of communication, that sort of media. But in our experiment, again, that talked about the short exposure, one video, just understanding how much you will support a content creator you never watched just because of the type of plea that he made. We didn't see actually in that sort of interaction, any effect to how alike you both are and even not to where the level of interest in the content itself in some sense. So, yes, people who found the content not interesting, they didn’t pay, unsurprisingly. But from a specific level, like mid level of interest, they paid as much as people who were super interested and super keen on the content.  

Ayden Férdeline [00:32:57] I have one last practical question about the study, how much friction was involved in the consumer making a payment to the creator? Did they have to create an account? Do they need to enter a credit card? Was there a browser plug-in they were using?  

Lior Zalmanson [00:33:11] So in that sense we made it very easy to them, they just had to answer how much money they are interested in giving and we automatically deducted it from their account. So this is, as you mentioned, by the way, (in) how you framed the question, it's a very passive way of paying. But it is about typing an amount, which is quite, quite a decision. But you're right that if you put more and more stages and you make it less automatic and you give people more friction, more time to resist, more time to forego of that decision, they will probably leave the website. They will probably not fully finish the funnel, the conversion funnel. And it's a great question that we should ask ourselves, should we then make this transaction less frictionless or actually friction is good for us? So, you know, when it comes to social platforms, a lot of us in academia and I just been participating in this conference on friction actually think we don't have enough friction. So, for instance, when we post things, actually maybe we want something to slow us down and say, listen, maybe think it over, read the content some more, you know, don't post things before you read them, don't post things you're not sure they are right or correct or true. But when it comes to e-commerce, it's all about the frictionless economy. Amazon has mastered it. I find it hard to tell the small content creators that they should add friction. Right? Because it's not fair, I think, that they can't compete with Amazon because they don't have these systems of frictionless type of transactions. So for the smaller, less able financially or less capable in terms of, again, financing resources, I feel like the frictionless is very beneficial. But for us, as consumers, as users, as the audience, I feel like friction is the more ethical and democratic thing. So it's a toss up, right? There's no one answer for that. But I think that Coil is doing a great work in providing, A - frictionless experience, but aiming at those who are they need the small the independents, the individuals who just want to make more money or an amount of money, any amount of money from the otherwise free content.

Ayden Férdeline [00:36:06] I agree. And something I find very interesting about the Coil model is that it contributes some kind of payment to every single creator whose work you consume. You don't have to consciously decide to support someone. I do worry that many people live in echo chambers and are happy to pay people who hold the same views as them. I think it is good to encourage a diversity of viewpoints and to ensure that there is some kind of remuneration for everyone, not just those who hold popular opinions or opinions that you agree with. So what's next for your research? Have you finished? Is there another stage?

Lior Zalmanson [00:36:44] We're currently conducting experiments on the effect of live dynamics of contribution, so you're not just making the ballpark number of how much money you've made available, you're actually seeing that money go up and up while the experiment is being run. So you actually see that dynamic. You can see this person is earning more and more and more by the minute. So this is very true, for instance, for streamers. Some streamers have these dynamic consoles that change while they screen. When we watch live streaming sessions, we see that more people and more and more are joining. And that has some effect on us. But we don't really understand economically what the effect is. So we're trying to understand when you see this upward trend, when we see this downward trend. How would you react? Would you be more intent of giving? Or again, you'll have this (feeling that) they have enough. They have enough viewers. So the diffusion of this money-giving responsibility, the idea that somebody else should pay, not me. They have enough viewers, they have enough money. So we're trying to see how it happens with this live streaming sessions instead of offline. It's not offline, but not live videos. What's the what's the opposite of live? maybe prerecorded.

Ayden Férdeline [00:38:15] Yes, prerecorded. Now, there are just so many different interesting paths that your research could go down. There are so many different counters out there. I'm curious if there are any researchers, be they in academia or industry, whose work on this topic you find really interesting and worth reading?

Lior Zalmanson [00:38:34] Um, so actually, Nathan Schneider is one of them, I have read his theory about feudalism and actually use it in a different research of mine where I'm looking at Facebook groups and the free labor (produced) by group admins. But that's a very different subject. Related but different. So I recommend my friend Efrat Nechushtai, who is like a brilliant journalism professor who's been working in the online and digital journalism and the business model related to them. I really like a book by Professor Tim Wu called The Attention Merchants, which goes through the history of journalism and writing, press related business models and shows us that yeah, we don't remember this…but journalism was sort of free and a lot of newspapers were delivered for free or for pennies. And because of that, some of them had very specific political agendas or they pushed certain topics. Or they included a lot of like propaganda. And it goes back to show how, again, this was always a war on people's attention and it goes back to where we started this talk of ours. And to tell that basically paying in many senses is the ethical thing to do, because when you're not paying, you should be very worried or very wary of, you know, who is paying and what is their agenda. And why did the algorithm show you this video? Who pushed it in your direction and so on and so forth.

Ayden Férdeline [00:40:15] So much food for thought. This has been a fascinating conversation. Professor Zalmanson, thank you very much.  

Lior Zalmanson [00:40:23] Thank you so much. Was lovely.  

Ayden Férdeline [00:40:26] I'm Ayden Férdeline and this has been POWER PLAYS. Next week on POWER PLAYS we speak with Grammy nominee Kokayi about how Black creators can benefit from the web monetization protocol Interledger.  

Outro [00:40:37] This has been POWER PLAYS. POWER PLAYS is a production of ETUNU. The guests on this program speak only for themselves and the views expressed do not necessarily align with those of ETUNU. Copyright 2021 ETUNU Corporation. All rights reserved.

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