Page 76 - IMDR Journal 2025

Research Article
MONETIZING USER-GENERATED CONTENT
MICRO TRANSACTIONS, ETHICAL DILEMMAS &
THE FUTURE OF DIGITAL ECOSYSTEMS

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Rajeev Singh , Pranav Bhalerao , Suraj Kamble 1
ABSTRACT
This research paper examines microtransactions in user-generated content (UGC) across various digital platforms.
Microtransactions, defined as small, optional in-app purchases, have become a dominant business model in the gaming
industry and are now prevalent in social media, video-sharing sites, and e-commerce platforms. The study explores the
motivations behind the adoption of microtransactions by content creators and platforms, the impact on user engagement and
content quality, and the ethical and regulatory concerns associated with this monetization strategy. The paper also discusses
future trends and opportunities for sustainable revenue models and equitable content creation. Key findings highlight the
importance of trust and perceived value in consumer behavior, the competitive dynamics of content diffusion, and the need for
transparency and regulatory oversight.
KEYWORDS Microtransactions, user-generated content, digital platforms, monetization strategies, consumer behavior,
ethical concerns.

OBJECTIVES platforms look for ways to earn revenue and keep users
engaged, especially in an environment where audiences
1. To analyse the rise of microtransactions in user-generated expect most digital content to be free (Bhatt, 2016). For
content (UGC) across various digital platforms, including
social media, video-sharing sites, and e-commerce. creators, microtransactions offer a way to provide unique,
premium experiences to their followers. For platforms, they
2. To explore the key reasons why both content creators and serve as a tool to tap into users’ emotional connections with
digital platforms are increasingly turning to micro- the content they love (Jarrett, 2021; Appel et al., 2019). The
transactions as a way to generate revenue. prominence of microtransactions reflects broader changes in
3. To evaluate how microtransactions influence user digital content creation and consumption, making their
engagement, the quality of content, and the long-term study crucial for understanding evolving monetization
sustainability of digital platforms. strategies and their ethical implications (Jarrett, 2021;
Mathur & Singh, 2021). This research explores creators'
4. To examine the ethical and regulatory concerns
surrounding micro transactions, such as fairness, trans- motivations, user experiences, and the impact on
parency, and the risk of exploitation. engagement, content quality, and inclusivity (Pellegrini et
al., 2013; Mileros et al., 2019).
5. To investigate emerging trends and future possibilities for
building sustainable revenue models that support fair and
inclusive content creation. LITERATURE REVIEW
6. To gain insights into consumer behaviour, particularly in Market Analysis
terms of trust, perceived value, and the willingness to spend The growth of microtransactions in user-generated content
money on microtransactions.
platforms has been a notable trend in the digital landscape.
Microtransactions, defined as small in-app purchases, have
INTRODUCTION become increasingly prevalent as a revenue model for
platforms hosting user-created content. (Cramer, 2018) This
In today’s digital world, user-generated content (UGC) has shift has been driven by the desire of content creators to gain
completely transformed how people connect, create, and preferential treatment and increased visibility for their
engage with content. One of the major developments fueling content, which can be achieved by paying a fee to the
this transformation is the rise of microtransactions a platform. (Pellegrini et al., 2013) The allure of micro
business model that started in the gaming industry but has transactions lies in their ability to generate a steady stream of
now expanded into areas like social media, video platforms,
revenue for both the platforms and the content creators.
and online marketplaces (Huang et al., 2022).Micro
Platforms have recognized the potential of this model, as it
transactions typically refer to small, optional purchases allows them to monetize the attention and engagement of
within apps that give users access to extra features, their users, while content creators can leverage
exclusive experiences, or cosmetic upgrades (Pellegrini et microtransactions to increase the reach and impact of their
al., 2013). Their popularity has surged as both creators and work. This dynamic has fostered a competitive environment

Corresponding author: anshsingh520@gmail.com
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Institute of Management Development and Research, Pune
Cite this Paper :
Rajeev, S., Pranav, B., Suraj, K., (2025)
Monetizing User-Generated Content: Microtransactions, Ethical Dilemmas, and the Future of Digital Ecosystems, JMDR
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