Simulating the conflict between reputation and profitability for online rating portals

TL;DR

This paper uses simulation to analyze how online rating portals balance reputation and profitability, revealing that subscription-based models may become essential for sustainable operation.

Contribution

It introduces a simulation model of interactions between rating portals and services, highlighting the potential shift towards subscription-based revenue models.

Findings

Subscription policies can protect ratings and reputation.

Portals adopting subscription models can achieve better profitability.

Industry may evolve towards subscription-based rating systems.

Abstract

We simulate the process of possible interactions between a set of competitive services and a set of portals that provide online rating for these services. We argue that to have a profitable business, these portals are forced to have subscribed services that are rated by the portals. To satisfy the subscribing services, we make the assumption that the portals improve the rating of a given service by one unit per transaction that involves payment. In this study we follow the "what-if" methodology, analysing strategies that a service may choose from to select the best portal for it to subscribe to, and strategies for a portal to accept the subscription such that its reputation loss, in terms of the integrity of its ratings, is minimised. We observe that the behaviour of the simulated agents in accordance to our model is quite natural from the real-would perspective. One conclusion from the simulations is that under reasonable conditions, if most of the services and rating portals in a given industry do not accept a subscription policy similar to the one indicated above, they will lose, respectively, their ratings and reputations, and, moreover the rating portals will have problems in making a profit. Our prediction is that the modern portal-rating based economy sector will eventually evolve into a subscription process similar to the one we suggest in this study, as an alternative to a business model based purely on advertising.