Deconstructing User Participation: Why in the Digital Era Advertising Income Is Different from Other Business Income

Abstract

This article describes various methods of monetizing different types of user-generated data within digital business models and concludes that the user participation is higher in income generation through advertising as opposed to through pay-as-you-go fees. The differentiation of advertising income is also supported by an analysis of the beneficiaries of network effects, by a survey of the financial statements of the biggest digital service companies and by practical examples that challenge arguments brought forward by the OECD and European Union for taxing digital business profits in market jurisdictions.