Abstract

As privacy regulations restrict the use of personal data without consent, publishers have adopted alternative monetization strategies to maintain revenue while remaining compliant. This paper examines three such widespread strategies: Optional Consent (OC), Consent-or-Pay (CP), and Subscription-Based (SB) and compares their implications for publisher profits and user surplus. Under OC, users may give consent or withhold consent at a non-monetary cost η; under CP, a strategy that has raised fairness concerns by explicitly conditioning privacy on payment, withholding consent is frictionless but requires paying a privacy-plus fee; under SB, users pay a subscription fee to access content and then decide whether to consent. We show that CP weakly dominates OC in terms of profits and can outperform SB where content value is low, while SB dominates CP where content value is high. Under SB, only a subset of users subscribe, and all subscribing users also give consent. In contrast, under CP all users participate, with some giving consent and others paying the privacy-plus fee where applicable, because where content value and data revenue are high, the publisher sets the privacy-plus fee so high that no user chooses to pay, and all users give consent. On the consumer side, we find that CP can deliver higher consumer surplus than both OC and SB in in the majority of regions. Notably, under SB, higher opt-out costs can weakly increase consumer surplus by inducing lower subscription prices. Overall, our results suggest that restrictions on CP may be inefficient, and that finding that consumer surplus under SB may increase with opt-out highlights that welfare effects can be counter-intuitive and sensitive to regulatory design, suggesting that privacy policies should be evaluated based on their effects on prices, participation, and consent behavior rather than on intent alone.

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