User-generated content (UGC) is one of the most promising near-term services. Most UGC are currently being distributed for free due to the lack of a suitable compensation system. This inability to compensate the creators stands in the way of UGC becoming a mature service with sustainable and sound growth. The current schemes used to charge for (professional) digital content are clearly inadequate for UGC, since UGC is significantly different from professional content, and users will hesitate to pay for the overhead costs imposed by professional content distribution channels. This may force the UGC market into becoming a lemon market, where most merchandise (i.e. UGC) is cheap but inferior in quality. This paper discusses measures to address this problem and proposes a solution, a smartcard-based microbilling scheme that will activate the market for UGC. Our proposal enables a user to pay for content on a per-play basis with minimal support costs; it greatly mitigates the risks of accessing UGC. This paper also shows that the proposed scheme can be implemented securely and feasibly by using current smartcards.

User-generated content (UGC) is one of the most promising services. Most UGC items are currently being distributed for free due to the lack of a suitable compensation system. This inability to compensate the creators stands in the way of UGC becoming a mature service with sustainable and sound growth. The current schemes used to charge for (professional) digital content are inadequate for UGC, since UGC is distributed through a different value-chain that dispenses with the selection processes of publishers and distributors found in the conventional value-chain for distributing professional works, and thus the quality of content is quite uneven. Such high quality unevenness greatly increases the user’s risk of buying a pup, and turns the UGC market into a Akerlof’s lemon market, where the quality of merchandise enters a death-spiral until the market collapses. This paper comprehensively examines the ability of monetization models to remunerate creators of UGC, and proposes a smartcard-based fair micro-billing scheme that will activate the UGC market. The proposed scheme enables users to pay for content in a “bit by bit” manner, and thus significantly reduces the user’s content quality risk as well as the “freeride” risks for creators. This paper also shows that the proposed scheme can be implemented securely and feasibly by using current smartcards