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Business News/ Opinion / Views/  Our digital payment systems can transform the creative economy

Our digital payment systems can transform the creative economy

Easy online payments have enabled assorted business models to emerge for Indian creators without relying on advertising

Photo: DPAPremium
Photo: DPA

The internet is on the cusp of one of the biggest changes in its short history—frictionless and ubiquitous micropayments. Ever since the first ads ran in the mid-1990s on the World Wide Web, the primary fuel of online content has been advertising. Over the course of the last decade, the way people accessed the web changed from computers to phones and from mostly text to mostly video, and yet the primary way to make money from content has remained the same—advertising.

We are at the beginning of the end of that ads-only internet business model. The main reason is that Big Tech has so decisively won the battle for digital advertising that only a handful of big and super-niche media companies can depend on it solely. The ability of platforms to both reach infinitely large audiences and do it in finely-targeted slices means that few promotional methods can compete. They already account for more than 70% of advertising spend, globally, and the momentum is unlikely to change.

However, we are also in the midst of another dramatic and more promising shift—paid content and services. Millions of people who had never hitherto paid on the internet have done so now for entertainment on Netlflix, cricket on Hotstar, music on Spotify, tutorials on YouTube, and even for newspapers behind paywalls. The paid content phenomenon is about to expand to the internet beyond just a few big companies. It has a name too, “the passion economy", which represents millions of individual creators offering their ideas as content or services for a small or not-so-small fee.

This new internet where payments are as ubiquitous as digital ads is already the reality in China. A multi-billion-dollar industry of creator payments ranging from self-help audio lessons (e.g., Ximalaya), Q&As with experts for a fee (e.g., a Quora-like service on Weibo), and several popular live streaming platforms. India too has all the building blocks necessary for a similar evolution—huge demand for local-language content, wide adoption of mobile payments, and massive social followings of internet stars.

On the old internet, Indian language creators face a double whammy—they’re unable to compete with Big Tech for advertising budgets and are losing out to English-language services. It is widely known that Indian languages are massively underrepresented online. Still, just how big the gap is between the number of speakers and number of pages can be shocking. To take just two examples, Hindi and Bengali are spoken by half a billion individuals and are among the world’s top-five spoken languages. But even taken together, Hindi and Bengali pages do not make it to the top 10 languages on the internet. Such imbalances in language “fair share" do not exist in any other types of media. Television, for example, produces hours of content in Indian languages and there is an appropriately minuscule viewership for English-language programmes in India.

The pent-up creative force of Indian languages is evident whenever a barrier is lowered (e.g., TikTok). What is missing is a business model that allows creators to take risks and scale up without huge fixed costs. The ad-only model simply does not allow this. It requires gigantic scale—millions of monthly users—for any meaningful revenue. The only way out, as in the physical world, is that at least part of the money comes directly from readers and viewers. This is where India’s burgeoning mobile payment system can transform the Indian internet. The UPI, a standard for small transactions, has scaled up to 2.2 billion monthly transactions in just four years. The media is full of stories about the astonishing embrace of mobile payments by everyone from vegetable vendors to airlines, yet the creative economy itself has barely used this infrastructure.

A third feature of the Indian internet that should help creators reach their fans directly is the widespread use of social media. While it is common knowledge now that India is the largest audience base for many global platforms, such as Facebook and WhatsApp, what is less often appreciated is the number of creators—firms as well as individuals—who have attracted such large followings that if even a fraction of their fans paid them, the money would vastly exceed any advertising revenues and make many projects viable.

When it comes to paid content, we are at the 1994 moment of the internet, when the first digital advertising appeared amid widespread scepticism over who would pay for such tiny ads. It took more than a decade for the winning search, display, video and classifieds platforms to shake others out. At this early stage for creator marketplaces and payments, four models have emerged. The most familiar is the ‘iTunes’ model, where a creator charges directly for a download. The most talked-about model is subscriptions, where individual creators can offer a newsletter or a podcast for a fee. In the tech and gaming world “tipping" is common for cool insights or nifty code—where the reader does not have to pay but chooses to do so nevertheless. And a fourth model is to be a patron of your favourite creative projects or individuals.

India’s creative economy is famously fecund, producing more films, TV shows, books and magazines than almost any other country. Compared to the diversity of thinkers and creators in traditional media, the Indian internet is a decidedly bland monoculture in English. However, with payments now a basic part of the web experience, a creative economy that is more diverse and of better quality can emerge. When online video was effectively entirely ad-supported, cat videos and bootleg clips of TV shows dominated the offerings for consumers. Netflix’s successful introduction of a paid online video offering dramatically changed that market, spawning exciting new TV creations. Payments directly from followers to creators will free them from the tyranny of scale and create a better marketplace for ideas and entertainment.

Samir Patil and Ritesh Mehta are co-founders of, a creator marketplace.

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Published: 21 Dec 2020, 08:40 PM IST
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