In the coming months, Waag will be working on the MicroDonor project. We are investigating whether a micro-donation system is a suitable revenue model for open-source developers, content creators and cultural institutions who do not want to make money off the personal data of their users. Read more about MicroDonor and watch the meetup, which took place on March 18.
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?
Micro donations 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 for the providers of these digital services, who operate according to the Public Stack model of ethical technology and public values (read more about the Public Stack here). But how does such a micro-donation system work in practice?
Waag received a grant to investigate how micro donations 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 little further into the investigation. In this section, we update you on our system-technical findings so far. What is Web Monetization? And what kind of parties are actually behind it?
How web monetization works
Web Monetization is a model that enables small payments (micro donations) from the visitor or user of a digital service to the organisation behind this service. Examples of these organisations 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 personalised advertisements.
The Web Monetization API (application programmer interface) has been around for several years now, enabling organisations to act as Web Monetization providers to facilitate transparent, secure payments between users and digital service providers. Providers act as intermediaries. Micro payments 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 amount per month, with Spotify as an intermediary distributing 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.
So far, Coil is the only Web Monetization provider that is working. 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). Here you install the Coil web extension, or a small program that ‘watches’ in your browser the platforms and content you visit. Organizations or content creators register with Coil in a similar manner. They create a wallet via Uphold, for example, 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 organisation that is affiliated with Coil, a dollar sign jumps on the Coil web extension and the counter starts running – you are on a monetised website.
Based on how long you're using the website, Coil will transfer a fixed amount of 36 cents per hour to the relevant organisation. For example, they balance the 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 monetised services they use for each individual user. This disconnection is important for privacy, as it prevents individual payments from being recorded between visitors and the receiving content creators or organisations.
The quest of Waag
Coil is funded by the American Ripple, which works with XRP currency, a bitcoin counterpart from the financial sector. Coil now has thousands of members, ranging from individual content creators to larger cultural and open-source organisations. 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 a wallet from 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 that 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 idea was that the web extension would detect the end of the Jitsi session, transferring a fixed amount (you) 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.
Change of plans
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 a provider yourself therefore has no real added value. Also, as a provider you start a new company with customers and money flows. This is organisationally complex and does not fit within the organisation of Waag.
Rather than reinventing the what, we turn our attention to the working out of the how. So we will not act as a Web Monetization provider ourselves as in the original plan, but use Coil and build our own web extension next to it (this space offers the Web Monetization API). The added value of such a proprietary second web extension is that you as a user can select exactly which platforms and open source projects you want to support, and that you can link clear conditions to them. For example, you can set a maximum amount or switch on and off your preferences for certain platforms. Ultimately, it is not the owner of the site, for example through a paywall for extra content, but the user who decides what is paid for. Below is an example of what such a web extension could look like.
And now?
There are a number of follow-up steps in our investigation. First, we need to find out: what are you monetising? How do you determine which organisations 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 talk to you. Is a Web Monetization system indeed something we want? What other options are there? A public programme took place on Thursday 18 March, in which various organizations that are already experimenting with fairer earnings models will be featured. Re-watch the meetup (in Dutch).
We will also organise three co-design sessions on April 22, May 6 and May 20. 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 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 the site and contact Hannah via hannah(@)waag.org to participate in a co-design session.
