A study by the Indian Institute of Management (IIM) Lucknow has examined how digital platforms can strike a balance between profitability and user privacy through pay-or-consent models.

As global debates intensify over user data and targeted advertising, the research provides timely insights into models that allow users to either pay for an ad-free experience or consent to personalised ads, helping platforms align business sustainability with ethical data use.

The study has been published in the Annals of Operations Research (Springer) and co-authored by Suresh K. Jakhar, Professor of Operations and Supply Chain Management at IIM Lucknow, along with former research scholars Dr. Mohit Ray (IIM Kashipur) and Dr. Ajit Pratap Singh (T.A. Pai Management Institute, TAPMI).

To analyse how privacy sensitivity shapes user and platform behaviour, the researchers built a formal model of the creator–platform–viewer ecosystem.

The model provides measurable thresholds for platforms to decide when to rely on ads, when to introduce subscriptions, and how to design hybrid models that respect user comfort while maintaining profits.

Key findings of the study include:

• Subscription models outperform ad-funded models when users’ privacy concerns are high, while ad-based models perform better when privacy concerns are low.

• 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 user trust while monetising effectively.

The study also provides practical parameters—such as pricing, ad intensity, and data sensitivity—that platforms can fine-tune to optimise revenue without alienating privacy-conscious users.

The findings are particularly relevant for video, music, podcast, and digital news platforms, where evolving user expectations and emerging data protection regulations are driving a shift towards consent-driven and privacy-aware business models.