SHOWROOM is a “virtual social tipping system”.

So, by what methods can the SHOWROOM be devised as a social tipping service? The secret is mentioned in the Terms of SHOWROOM’s Membership.

Terms of SHOWROOM’s Membership
Article 11 Show Gold

• Show Gold (“Show Gold”) refers to the points for using content (including digital items) specified by the Company.
• SHOWROOM Members may obtain the right to use contents within the scope specified by the Company by using Show Gold in accordance with the methods specified by the Company. Show Gold may only be used within the scope of the Services specified by the Company.
• SHOWROOM Members may not lease, transfer, trade, or pawn Show Gold and the right to use contents, or allow other Showroom Members or third parties to use Show Gold and the right to use contents, except for the case permitted by the Company.
• SHOWROOM Members may not request a refund of Show Gold or exchange of Show Gold to contents other than the contents specified by the Company, except for the case permitted by the Company.
• If a Showroom Member forfeits eligibility to use the Service due to withdrawal of membership etc., any unused Sow Gold shall also expire at the time.

In the SHOWROOM, an audience member who intends to make a social tip must first buy “Show Gold”. Show Gold can be used to make a payment (SHOW GOLD Caution 1) when purchasing gifts (digital contents) such as bouquets or Tokyo Tower, which are necessary when tipping (gifting) a live streamer in the SHOWROOM and can be considered as “a prepaid payment instrument” under the Payment Services Act (SHOWROOM Inc. has applied as the issuer of prepaid payment instruments (for own business） Refer to external link).

Thus according to the “SHOWROOM Live Streaming Broadcasting Terms” and the “Live Streaming Broadcasting Guidelines” (for use by SHOWROOM members)”, the SHOWROOM can clearly do the following:

• Grant rating points to the live streamers after the evaluation of each live streaming broadcast by a method independently determined by SHOWROOM based on, among other things, the size of the audience, the posting of comments, and the achieved use of digital content
• Pay a share of profits to the live streamers of 1 yen for each rating point
• Freely determine the method of calculating the rating points and the payment method of the share of profits

SHOWROOM Live Streaming Broadcasting Terms
Article 5 Distribution of the Profits
The Company shall rate the live streaming broadcasts with a method determined by the Company based on the content of the live streaming broadcast by the live streamer or the reaction of the SHOWROOM Members viewing such live streaming broadcast. The Company shall then pay as distributed profits a monetary amount determined by the Company based on the rating (hereafter, the “Share of Profits”) from the profits received by the Company from these Services. Moreover, the Company may freely determine the payment method, etc. for the Share of Profits and the rating method for the live streamer’s live streaming broadcast and may also freely change the foregoing. (Omitted below)

Live Streaming Broadcasting Guidelines (for use by SHOWROOM members)
Share of Profits
The Company shall rate each live streaming broadcast using a method determined independently by the Company based on the reaction of SHOWROOM Members viewing the live streaming broadcast by the live streamer (including the size of the audience, the posting of comments, and the achieved use of digital content) and provide rating points. The Company may pay a Share of Profits to the live streamer of 1 yen for each rating point. Furthermore, the Company may freely determine the calculation method of the rating points and the payment method of the share of profits and may also freely change the foregoing. (Remainder omitted)

Note:
The Broadcasting Terms and Broadcasting Guidelines mentioned above are the provisions applied to live streamers (amateur accounts) who have entered into a direct broadcasting contract with SHOWROOM, and the amount of compensation that a live streamer who is a party to a contract with an organizer, such as a production company, school or agency (an official account) can obtain varies depending on the terms of the contract with the organizer

In other words, SHOWROOM pays a share of profits to the live streamer based not only on the socially tipped gifts the live streamer receives from the audience during the live streamer’s broadcast but also on the in-house standards which vary depending on comments and the size of the audience. Therefore, the SHOWROOM system does not mean that the socially tipped gifts from the audience are directly delivered to the live streamer.
The SHOWROOM system is not a simple mechanism where points (prepaid payment instruments) are sent from the audience to the live streamer with a deduction for fixed commission; rather it is a unique system involving payment of a share of the profits to the live streamers calculated based on independent rating criteria. It could be [more accurately] called a virtual social tipping system where the system resembles social tipping, but it is not social tipping.

SHOWROOM’s virtual social tipping system is one solution to clear the obscure hurdles under the Payment Services Act. At a point where social tipping systems (or systems similar to social tipping) are expected to increasingly broadcast from now, not only dynamic content such as live broadcasts, but also static content such as text and illustrations, it can be said that the time has come for content broadcasting service providers to really consider adopting a social tipping system (or a system similar to social tipping) that is lawful and does not conflict with the Payment Services Act and other laws.
(Kenji Sugiura, Attorney-at-law)

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Related article:
Learning from the Mercari Example: The Snares of the Payment Services Act in C2C Services

Note:
This article is an analysis from the author’s viewpoint of a business model deduced from such written materials as the Terms of SHOWROOM’s Membership, and, as such, there is no guarantee that the contents of this article are consistent with the details of SHOWROOM’s actual business model.