The coming months, Waag is working on MicroDonor. In this project, we investigate whether a system of microdonations would be a suitable business model for open-source developers, content makers and cultural organizations that prefer not to make money with the personal data of their users. Through this blogpost series, we keep you posted on our (re)search.
This post originally appeared on our website. Also see the first post here.
Imagine running a literary magazine. You want to offer open, honest content to as many readers as possible. Preferably as accessible (and therefore cheap) as possible, and in a privacy-friendly way in which private data of users is not ‘secretly’ collected. At the same time, you still have to finance your platform in some way. How do you do that?
Microdonations have a lot of potential: through small, voluntary donations, you as a user support open-source platforms, content creators and cultural institutions of your choice. A win-win situation for both the user, who no longer (unknowingly) 'pays' with his private data, and the providers of these digital services, who operate according to the Public Stack model of ethical technology and public values (read more on the Public Stack here). But how does such a microdonation system work in practice?
Waag received a grant to investigate how microdonations can be used to support public and open-source services on the internet. We started with the question: is Web Monetization a suitable model for financing Public Stack services? We will keep you informed of our search through this blog series. In the first post, we outlined the urgency and background of the project. We are now a few steps further in the research process. In this post, we update you on our system-technical findings so far. What is Web Monetization? And what kind of parties are actually behind it?
Web Monetization is a model that enables small payments (microdonations) from the visitor or user of a digital service to the organization behind this service. Examples of these organizations are open-source platforms or creators, and cultural institutions that want to share their (online) content openly and are looking for a different revenue model than through personalized advertisements.
The Web Monetization API (application programmer interface) has been around for several years now, enabling organizations to act as Web Monetization providers to facilitate transparent, secure payments between users and digital service providers. Providers act as intermediaries. Micropayments from users of digital Public Stack services reach the providers of these services via this route. Compare it to Spotify: as a user you pay a fixed contribution per month, which Spotify as intermediary then distributes in small amounts among the music providers (the artists). With Web Monetization, these micropayments run via the Interledger protocol ("ILP" for convenience), which supports online transactions between virtual wallets using blockchain.
Coil is the only Web Monetization provider that currently exists. Coil works as follows: through a monthly flat fee subscription of $5 you become a member, without having to create a wallet (a digital place in which your money is stored). You hereby install the Coil web extension, or a small program that ‘watches’ along with your browser activity and the platforms and content you visit online. Organizations or content creators register with Coil in a similar manner. They create a wallet through an organization like Uphold, and place the Web Monetization ‘tag’ on the API of their page. As a user, when you visit a platform or view content from an organization that is affiliated with Coil, a dollar sign becomes visible on the Coil web extension and the counter starts running – you are on a monetized website.
Based on how long you're using the website, Coil will transfer a fixed amount of 36 cents per hour to the organization in question. Coil thus balances incoming money flows from users with payments to receiving platforms, whereby they themselves as provider absorb the remaining risk. By working with fixed amounts, they avoid having to keep track of which monetized services are used by each individual user. This disconnection is important for privacy reasons, as it prevents individual payments between visitors and the receiving content creators or organizations from being recorded.
Coil is funded by the American Ripple, which works with XRP currency, the bitcoin counterpart on behalf of the financial sector. Coil currently has thousands of members, ranging from individual content creators to larger cultural and open-source organizations. In partnership with the Mozilla Foundation and Creative Commons, Coil set up Grant for the Web, a $100 million fund that explicitly focuses on new developments within Web Monetization. Waag received a subsidy for our research from this fund. We kicked off in January, with the aim of eventually developing a prototype for our own Web Monetization web extension.
We started an experiment with a small web extension, with one test user who acted both as user of the service and on behalf of the provider. As a test, we used meet.waag.org, our own implementation of Jitsi, an open-source video conferencing service. Via Uphold, the test user created his own wallet and one wallet for Waag. The first stumbling block immediately followed: in order to make full use of the wallet, all kinds of personal data were required, such as a copy of your passport - not exactly privacy-friendly...
We therefore used a sandbox (test network) with fake money. We linked the ILP to meet.waag.org via the Jitsi API, which is openly accessible and to which you can 'punch in' code. The goal was that the web extension would detect the end of the Jitsi session, transferring a (small) fixed amount the moment you hang up. And it worked! Fake money went out of the user wallet and flowed back into Waag's wallet. The 'naive implementation' was successful.
We want to use our research to find out whether micro-donations are a suitable model for financing digital Public Stack initiatives. Initially, Waag thought it would be necessary to act as a Web Monetization provider (just like Coil) in order to fully investigate this. This turned out to be unnecessary, due to the possibilities and freedom the Web Monetization interface offers via Coil. Acting as provider ourselves would therefore not have real added value towards the project aim. Besides, working as provider entails setting up a new company with customers and money flows. This is organizationally complex and does not fit within the organization of Waag.
Rather than reinventing the wheel, we would thus rather aim our attention at finetuning the system. We will not act as Web Monetization provider ourselves - as originally proposed - but instead use Coil and build our own web extension alongside it (this flexibility is offered by the Web Monetization API). The added value of an additional, Waag-owned web extension is that we can build in extra options so that you can as user select exactly what platforms and open-source projects you want to support, and that you can link clear conditions to monetization. For example, you can set a maximum amount or switch your preferences for certain platforms on and off. Ultimately, it is not the owner of the site, for example through a paywall for extra content, but the user that decides what is paid for. Below is a mock-up of what a prototype for the extension could eventually look like.
There are a number of follow-up steps in our research trajectory. Firstly, we need to determine what do you want to monetize? How do you determine which organizations and content belong to Public Stack initiatives, from which the user can ultimately make a selection via our web extension? In addition, the process surrounding both web extensions must be as transparent as possible to the user, with terms and conditions for payments and preferences clearly defined - including Coil's privacy terms. How do you communicate this as openly as possible?
We would also like to involve you. Is a Web Monetization system indeed a system we want to take up? What other options are there? A public evening event took place on Thursday 18 March, in which various organizations that are already experimenting with fairer business models were be featured. Re-watch the meetup here (in Dutch).
We will also organize three co-design sessions on April 6, April 22 and May 6. In these, we will work with open-source developers, content creators and cultural institutions to design the 'ideal' Web Monetization standard. What would Web Monetization look like if we do want to act as a provider ourselves, what conditions should such a standard meet and who should be involved in the design process? Does your work relate to this or do you have a personal interest in innovative revenue models? Keep an eye on our site and contact Hannah (hannah[@]waag.org) to participate in a co-design session or for further questions/remarks.