Restricting Ad-Supported Monetization in the Metaverse Can Erect a Giant Barrier in Our Digital World
A mistake that tech critics often make is assuming the online world of the future will continue to resemble today's online world. Privacy fundamentalists have applied that same flawed logic to the metaverse in their calls to regulate platforms’ collection of biometric data for advertising. This could end up restricting platforms’ ability to innovate and explore different business models as the metaverse develops from its early stages to potential widespread use.
Critics of today’s ad-supported Internet fear that an ad-supported metaverse could create new privacy risks, as these devices can capture and process more personal data than today’s web browsers and mobile devices. For example, advertising platforms may want to collect data about users’ attention or involuntary physical responses, such as gaze tracking, body temperature, or pupil dilation, to measure the impact of ads, rather than traditional engagement metrics such as clicks, comments, or shares. Concerns about potential misuse of this data have led to calls for regulation that would restrict metaverse platforms from collecting data for advertisements, particularly data related to biometrics.
Users can access much of the “2D” Internet, including most social media platforms, free of charge because these services rely on advertisements to fund their operations. In the metaverse, some platforms will likely embrace the ad-supported model, butcalls to regulate advertising data in the metaverse are premature because advertising is not yet the predominant business model of the metaverse and alternative monetization methods continue to arise. While it is too early to create metaverse-specific privacy regulations, future proposals should be neutral about platforms’ business models and focus on general principles that allow platforms to experiment with different monetization schemes as they aim to make their platforms equitable, inclusive, and safe while also being financially sustainable.
Meta, for example, has placed a more significant emphasis on digital sales of goods and has announced the launch of the Meta Avatar Store in partnership with luxury clothing brands. As its name indicates, this store will allow users to purchase digital clothing for their avatars on Meta-owned social media platforms. Additionally, with the introduction of in-app purchases in its virtual reality platform HorizonWorlds, Meta could find an additional revenue stream if it were to charge a payment processing fee for the digital goods sold by content creators and third parties. In Horizon and other virtual reality platforms such as VR Chat, AltspaceVR, and RecRoom, influencers and content creators can charge users for entry to a particular world, similar to charging people for in-person events such as concerts or parties. As these platforms do not offer pay-to-enter functionalities yet, content creators usually rely on third-party tools to sell these tickets, then making these worlds private and relying on moderators to make sure only those who have paid can enter the world.
While privacy critics might prefer a sales-based metaverse economy to an ad-based one, this shift would pose a significant challenge in terms of equity and inclusion. Suppose app and in-app sales, fees, and subscriptions become the primary monetization method for creators on these platforms. In that case, it would mean that more content is paywalled, thus excluding those unwilling or unable to pay for the content. The ad-based Internet has been particularly effective in lowering the barriers for technological inclusion as it has provided a low-cost product that makes it more accessible to individuals who would be left out in a pay-to-use regime.
Despite its rise in popularity in recent times, there is no certainty over what the metaverse will look like and what practices will remain in the long term, including its predominant business model. Companies will likely try various models that combine ad-based and sale-based tools to find financial sustainability and a broad user base. This experimentation will lead to a rapidly changing environment, especially during the technology’s early years. Thus, regulations aimed at a specific business model could become irrelevant as businesses pivot to alternative approaches. Additionally, restricting business models could hamper businesses’ ability to experiment with different monetization schemes, a process necessary for both consumers and developers to make informed decisions over which product is better equipped to satisfy user needs.
