DST14200 - Social Media - Overview
Digital Services Tax (DST) is charged on the revenues received in connection with specified digital services activities. The following are digital services activities for the purposes of DST:
- a social media service
- an internet search engine
- an online marketplace
A group will be within the scope of DST if it provides one or more of the three digital services activities.
The definition of a social media service is intended to cover business models that rely on an active and engaged user base to create value. There are many ways that social media firms derive value from their users. These include the role users perform in attracting new users to the service and in increasing other users’ engagement with the platform. The data collected on users is also often an essential part of monetising the platform.
As a result, cultivating and sustaining an active user base will typically be a core business strategy for social media firms. They will often encourage users to regularly contribute content or spend more time on the platform.
The social media definition focuses on two key aspects of user participation. An online service will meet the definition when both of the following conditions are met:
- The main purpose, or one of the main purposes, of the service is to promote interaction between users (including interaction between users and user-generated content).
- Making content generated by users available to other users is a significant feature of the service.
Interaction between users
Social media services usually benefit from strong network effects where the utility a user derives from a platform is strongly correlated with the number of other active users on the platform. The ability to interact with other users is usually a key part of the user’s experience. Users join online communities, foster connections with other users and create their own user networks. Within these networks, users often communicate with each other and share content.
User generated content
Most social media services are largely populated by user-generated content. This content can be in many forms, ranging from digital media like videos or images to text, including reviews, comments or messages. In many cases, user-generated content is the primary source of content on the platform and is essential to attracting new users and driving user engagement.
Further details about what is meant by main purpose, user interaction and user generated content is contained in the following sections.