HEC Research Papers Series,
HEC Paris

Abstract: Prestigious news publishers, and more recently, Meta, have begun to request that users pay for privacy. Specifically, users receive a notification banner, referred to as a pay-or-tracking wall, that requires them to (i) pay money to avoid being tracked or (ii) consent to being tracked. These walls have invited concerns that privacy might become a luxury. However, little is known about pay-or-tracking walls, which prevents a meaningful discussion about their appropriateness. This paper conducts several empirical studies and finds that top EU publishers use pay-or-tracking walls. Their implementations involve various approaches, including bundling the pay option with advertising-free access or additional content. The price for not being tracked exceeds the advertising revenue that publishers generate from a user who consents to being tracked. Notably, publishers’ traffic does not decline when implementing a pay-or-tracking wall and most users consent to being tracked; only a few users pay. In short, pay-or-tracking walls seem to provide the means for expanding the practice of tracking. Publishers profit from pay-or-tracking walls and may observe a revenue increase of 16.4% due to tracking more users than under a cookie consent banner.

Keywords: rivacy; tracking; consent; behavioral targeting; online advertising

JEL-codes: D12; D83; L86; M31; M38

58 pages, April 4, 2024

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