New Delhi: As global debates around data privacy and ad-driven monetisation intensify, new research from the Indian Institute of Management (IIM) Lucknow suggests that digital platforms can achieve both profitability and user trust through pay-or-consent models.
The study, published in the Annals of Operations Research (Springer), was co-authored by Prof. Suresh K. Jakhar, Professor of Operations and Supply Chain Management at IIM Lucknow, along with his former research scholars Dr. Mohit Ray (IIM Kashipur) and Dr. Ajit Pratap Singh (T.A. Pai Management Institute, Manipal).
At the heart of the research is the pay-or-consent model, which allows users to either pay for an ad-free experience or consent to targeted advertising. The authors argue that this approach can enable platforms to optimise business performance while aligning with ethical data practices.
“As digital platforms navigate the crossroads of profitability and privacy, our research offers a structured lens to balance both,” said Prof. Jakhar. “Respecting user privacy need not come at the cost of growth — platforms that design transparent, consent-driven business models can build stronger trust, higher engagement, and sustainable profitability.”
The researchers developed a formal model encompassing the creator–platform–viewer ecosystem to analyse how privacy sensitivity influences user and platform behaviour. This model provides measurable thresholds to help platforms decide when to rely on advertisements, when to introduce subscriptions, and how to design hybrid formats that respect user comfort while maintaining financial viability.
Key Insights and Implications
The study’s findings highlight several actionable strategies for digital platforms:
-
When privacy concerns are high, subscription-based models outperform ad-funded approaches.
-
When privacy sensitivity is low, ad-based models deliver stronger results.
-
A hybrid model — combining limited, non-intrusive ads with moderately priced ad-free tiers — can maximise both user satisfaction and platform profitability.
-
Using less sensitive, contextual data enables platforms to monetise effectively while maintaining user trust.
Additionally, the research outlines practical levers such as price points, ad intensity, and data sensitivity, offering digital platforms a way to fine-tune revenue optimisation without alienating privacy-conscious audiences.
The insights are especially relevant to sectors such as video streaming, music, podcasts, and digital news, where evolving data protection regulations and consumer expectations are forcing companies to reassess their monetisation strategies. With leading platforms already testing ad-light and premium subscription options, the study underscores a growing shift toward consent-based user experiences in the digital economy.
Founded in 1984, IIM Lucknow is among India’s top management institutions, accredited by AACSB and AMBA, and consistently ranked among the top business schools in the NIRF rankings. The institute’s research centres regularly contribute to public policy and management innovation, with several faculty members featuring in the top 2% of global scientists for research output and impact.
