LUCKNOW: In a study conducted by Indian Institute of Management Lucknow, researchers have explored how digital platforms can balance profitability with user privacy using pay-or-consent models.
As global debates intensify around user privacy and data-driven advertising, this research provides timely insight into the dynamics of pay-or-consent models. Such models allow users to either pay for an ad-free experience or consent to targeted ads, that can be optimised by digital platforms for business sustainability and ethical data usage.
The findings of this study have been published in the prestigious journal, Annals of Operations Research (Springer), in a paper co-authored by Prof. Suresh K. Jakhar, Professor, Operations and Supply Chain Management, IIM Lucknow, along with his former research scholars, Dr. Mohit Ray (Currently affiliated with IIM Kashipur), and Dr. Ajit Pratap Singh (currently affiliated with T.A. Pai Management Institute (TAPMI)).
Speaking about the ideology of this study, Prof. Suresh K. Jakhar, said, “As digital platforms navigate the crossroads of profitability and privacy, our research offers a structured lens to balance both. We show that respecting user privacy need not come at the cost of growth — in fact, platforms that design consent-driven, transparent business models can build stronger trust, higher engagement, and sustainable profitability.”
To study how privacy sensitivity shaped user and platform behaviour, the research team built a formal model of the creator – platform – viewer ecosystem. The developed model helped in providing measurable thresholds to help platforms decide when to rely on ads, when to introduce subscriptions, and how to design hybrid models that respect user comfort while maintaining profitability.
Key findings of the study include:
Subscription models outperform ad-funded models when users’ privacy concerns are high. Conversely, when privacy concerns are low, ad-based models yield better results.Combining limited, non-intrusive ads with moderately priced ad-free tiers can maximise both profit and user satisfaction. Platforms using less sensitive, contextual data can retain users’ trust while still monetising effectively.
In addition to key findings, the study offers practical parameters, such as price points, ad intensity, and data sensitivity, that digital platforms can tune to optimize revenue without alienating privacy-conscious users.
The findings of this study are relevant to platforms offering video, music, podcasts, and digital news services, where evolving user expectations and new data protection laws are pushing businesses to rethink their ad models. With major digital platforms experimenting with ad-light and premium subscription options, this research underscores a broader market shift towards consent-driven experiences.
