June 11, 2012

The Product is YOU –> YOU are the Product

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The other day I heard a question that so wonderfully placed into perspective an ongoing debate I have been having with friends and colleagues:

Are you creating a profile on Facebook? Or is Facebook creating a profile on you?

Or put a different way:

If you’re not paying for the product then you are the product.

Inherent in these questions is an understanding of how Facebook derives revenue from its hundreds of millions of non-paying users. It is a question that must not be ignored. Why? This is much deeper than being solely about Facebook; this issue touches on how we – as a society – think about our privacy and the social contract we make with social media companies who are constantly collecting data on who we are, what we do, and with whom we interact. Yes – that is a lot of information to know about someone and if a company collects, repackages, and sells this information in the open market then I think the user should at least be made aware of the process in a simple and straightforward manner.

Now – do companies like Facebook have to give users a choice? Do they have to offer two options on how revenue is generated? By way of example – offer ‘A’ states the user has to pay to keep data private while offer ‘B’ provides a free service but allows the company to repackage and sell user data. It is of course not appropriate to force any company to act in this regard; however, if a social media company dared to adopt this approach they could draw greater attention to how data is being used and provide a more meaningful way for people to understand what they are getting into while enjoying the online, trackable, measurable social world in which we live.

On a related note, we at SpiderOak engage in the ‘freemium’ model. We provide a set amount of space for free so that users can enjoy and become comfortable with the product. Once additional space requirements are necessary, the user can purchase additional space. Inherent in this model – from the SpiderOak perspective – is that we never ever monetize free user accounts by way of advertising or any other means. We see this as having a tremendously negative impact on the freemium model – especially when in the business of ensuring privacy.

As always, we are eager to hear from you so please don’t hesitate to send thoughts and comments.