They already exist but we are happy to use free services without (perhaps until now) thinking about how they are financed by the trading of our personal data.
Think of the services that you already pay for:
Your mobile phone contract, possibly tens of pounds per month.
Netflix — around $10/month for all you can eat streaming movies
Spotify — also around $10/month for all you can eat
Think about the services you don’t pay for with money
Facebook — “free” in exchange for all of our data
Twitter — “free” in exchange for all of our data
Whatspp — used to be 99c/year — now “free” in exchange for all of our data
Instagram — “free” in exchange for all of our data.
When I reflect on it, I am happy to pay Netflix and Spotify each and every month because the value I perceive from them is realised.
I regularly pass this ad outside my local cinema that says
“All-you-can watch cinema from just £20.40/month”
Whenever I see that, I equate that to what I have from Netflix.
For less than half this rate, I can see the widest range of movies when I want and in the comfort of my own home or on a train or a plane if I download them beforehand. I am not restricted to seeing what the movie place happens to want to show me and at a time of their choosing. Likely in a month there would not be more than 10–20 different movie choices.
I look at the £20.40 “investment” and think that this is not a great deal compared to Netflix.
I have been a paying Spotify customer for a number of years now. Their free product has ads peppered all the way through the music, and I was happy to pay £10/month to “remove ads”.
So if Facebook, Twitter, Instagram or Whatsapp offered a product for a price, what would be the pricepoint you would be prepared to pay, and what additional features would you want for the paid tier?
I heard an excellent presentation this morning from the Qantas CEO Alan Joyce at an event run by the Australian-UK Chamber of Commerce in London.
There was a discussion as a result of a question from the floor about the different “tiers” on an aircraft namely First Class, Business Class, Premium Economy and Economy.
Apparently airlines “need” a first-class product but barely make money from it. Business class is normally 7 x the economy fare and premium economy fills a gap and is 2–3 x the economy fare. Airlines want as many business class seats as they can as these are the most profitable.
So if there were tiers of membership for the free products we rely on today, which tier would you want?
Some years ago, when Twitter was really struggling to make money, the “power users” considered paying $100/year to have a premium product and keep Twitter going.
Instead they went for the traditional advertising model, and even kicked data customers paying upwards of $1M per year for access to the full “firehose” off the platform — so confident they were that they could sustain their business with advertising.
As I have opined over the last week or so, what has happened most recently to Facebook has shown how exposed they are with their current business model that is completely beholden to advertising.
From what I have observed, services that start off being free find it very hard to start to charge (eg paywalls with newspaper sites), however services that offer a tiered class of service, starting at free with basic options and paid models providing more bells and whistles have an easier time of migrating free users to a paid tier.
Because Facebook, Twitter, Instagram and Whatsapp offer EVERYTHING for free, it may be impossible to introduce a paid model.
If the advertising revenue decreases due to the current crisis around the use of personal data, then we may see Facebook et all having to charge to keep the lights on.
What services that you currently use for free would you be prepared to pay for?
In my mind, I would be happy to pay up to $500/year for a service that acts as my “digital agent” and would be an AI powered assistant that stood in-between advertisers and existing suppliers and read all the spammy ads for me.
This would also mean that the social networks would have to get my data FROM ME and not the other way around. As I have said many times before, we are less than 5 years away from a revolution where individuals own and control their own data, and platforms like Facebook PAY US for access to our data.
One standout example of a social network that charges is LinkedIn.
Since the early days, you could pay to have more access to the site. I pay around £240/year for the lowest paid tier “Premium Career” product. I see value in this investment as it shows I am a paid member on my profile, and I have better analytics on who has viewed my profile.
Because LinkedIn holds back some of their functionality for paying users, there is an upgrade path and they don’t have to exclusively rely on advertising revenue to survive.
It seems that social media sites are one of the few that offer “the lot” for “free”.
Imagine if mobile phone contracts were free (powered by ads that interrupted your call every few minutes with an ad). This service actually existed years ago — and failed. People were actually prepared to pay a premium to “remove ads”.
Now that Facebook has been exposed and we know why their service is free (because they make money from our personal data — and we let them), will we see other networks starting to introduce paid options, and allow us to “remove ads” also, and in return start to take real control of our data.
What is your view?
Please leave a comment below or tweet me @AndrewGrill.