Fee-based Facebook and Google

It’s clear, isn’t it, that we pay for Facebook and Google one way or the other.

One way: We pay by fee. 

The other: We pay in privacy. 

I get why Facebook and Google are prepared to play loose and fast with our privacy.  That’s the business model.  This is the way they make money.  They "have to."

Actually, there’s an alternative.  It is to give us the option of paying for Facebook and Google in something less precious than our privacy.

I’m not saying millions would sign up for this option.  But it would clarify the debate nicely.  It would allow Google’s Eric Schmidt to say, "Oh, privacy is important to you?  Here’s the alternative.  Pay us."

(And wouldn’t it be interesting to see someone run these numbers.  What would Facebook have to charge us in the currency was, um, currency?)  

But I think this wouldn’t just be useful for Facebook and Google.  I think it might be obligatory.  I think a fee option is something they’re obliged to make available.  It would be mean they no longer "have to" invade our privacy.  

11 thoughts on “Fee-based Facebook and Google”

  1. [Disclaimer: I work for Google, but am speaking only for myself here]

    Here are some estimated numbers for Facebook: Facebook’s revenue in 2010 is estimated to be approximately $2B (http://mashable.com/2010/12/16/facebook-2-billion-revenue/) – if we accept the 500M Facebook users that’s been in the press, that means an average user is worth $4/year. I would assume American users are typically worth more to advertisers than users in other countries, so maybe $10-$15/year for an American user (with adjustments based on demographics, of course). That number will undoubtedly go up next year as Facebook finds better ways of monetizing their user base.

    I think you’d be surprised at how few Americans are willing to pay even $10 for privacy. For instance, how many people have loyalty cards to save a few bucks at the grocery store? Or use credit cards, which store a complete history of our purchases in exchange for some convenience?

    That being said, it’s relatively straightforward to maintain privacy online with your browser if you choose. For one thing, I recommend installing an ad blocker (e.g. AdBlock Plus is the most popular extension for Firefox). To get more serious, you could use Google’s Chrome browser and do your browsing in incognito mode so all cookies are deleted after each session and no history is kept of your browsing (http://www.google.com/support/chrome/bin/answer.py?hl=en&answer=95464). You can also set most browsers to block cookies by default if you really don’t want any information tracked by Google or Facebook. Of course, the usefulness of these sites goes down if you block cookies and most people choose utility over privacy.

    1. Eric, thanks, very helpful, so not so much then. And a small price to pay for value rendered. I forget what I ended up giving Wikipedia this last campaign. 25 or 50 bucks. Less than last time but still more than I pay for a magazine subscription. But again a tiny price for value rendered. how did we get into this false economy that says online enterprise should be “free” when we have none for a very long time that there is no such thing as “free.”

  2. I helped out with a survey last year on willingness to pay for twitter, facebook and a few other services. I can’t quote the exact numbers, but basically you are likely see almost an order of magnitude loss in users if you charge a buck a month.

  3. So is the tentative proposition that people, generally, value privacy less than they value the benefits of using Facebook and Google, and therefore have a greater propensity to exchange privacy for those benefits as opposed to exchanging money?

    Maybe it’s me but I don’t see that as such a bad exchange really for the simple reason that it’s an exchange involving privacy and not liberty. People are voluntarily choosing to enter into the exchange, and as Eric pointed out in his comment above, there are measures to reduce the amount of privacy that must be exchanged. People can always opt out of engaging with Facebook or Google altogether, or never get involved in the first place (there must be SOME people who haven’t yet … somewhere).

    I think one of the major problems that firms like Facebook and Google raise is the moral obligation that comes along with their access to the private information to which they are exposed, and ensuring they uphold individual liberty. While I don’t know that they currently impinge on liberty in any way, it could be a slippery slope … liberty being defined as “the state of being free within society from oppressive restrictions imposed by authority on one’s way of life, behavior, or political views”. I think historically we (collective “we”) have thought of authority as government or “the state”. Maybe with the roles firms like Facebook and Google occupy in society we are going to have to rethink concepts of authority and its influence on privacy and liberty? Maybe this is/has happened already (I’m no expert in this arena).

  4. Dammit … my previous comment didn’t come out right. My first sentence should read:

    So is the tentative proposition that people, generally, value privacy less than they value money, and therefore have a greater propensity to exchange privacy for the benefits of using Facebook and Google, as opposed to exchanging money for those same benefits?

    Or something like that …

  5. Alex, I would argue that the real issue is that people do not value privacy in economic terms. In other words, most people do not think about placing a price on privacy, so there is no way to value it consistently, and certainly not enough consistency to create a market for privacy.

    Privacy tends to be perceived instead as an absolute rather than something that can be paid for, much like human life. So it gets eroded away subtly, but when it comes to people’s attentions, they react strongly (as Facebook has experienced several times).

    Corporations are currently the beneficiaries of this ambiguity, but I’m not sure it’s an ambiguity that should be resolved. Do we really want to have a menu of privacy, where companies pay $10 for your email address, $100 for your contact list, $50 for your set of interests, or whatever? I feel like placing an explicit price in that way would devalue privacy. It reminds me of the experiment where an Israeli day care center started charging parents when they were late to pick up their kids, and the number of parents who were late actually increased, as now they felt a price was in place for their being late, and they were willing to pay it. Privacy should be handled as a norm, not an economic transaction.

    1. Eric, I think you are probably right that people don’t think about something like privacy in economic terms. However, I would reply that whether people think about it that way or not, it seems like that’s the current reality with firms like Facebook and Google (which is how I interpreted Grant’s blog post in the first place). The firms derive financial value from the exchange of an individual’s private data in return for a myriad of benefits to the individual. And maybe people don’t value privacy in economic terms because they don’t perceive an economic exchange occurring, but in reality there is one.

      Google and Facebook (purely as examples, I’m sure there are others) gain financial benefit downstream from my private data. Displaying certain types of ads based on my search preferences, or throwing up ads based on the people and interests I communicate via my social network all accrues financial gain to the firm. I’ve heard it argued that there is a benefit to me as well. Based on this I would argue that there is a market for privacy because without my data, firms like Google and Facebook would not be able to target certain audiences with ads (and charge for the service) as effectively. Google and Facebook set prices for their services (or do through auctions, I’m no expert on how this actually happens), which means that someone (or a system) has determined the economic price of my disclosure of data. Similarly, how much might I be willing to pay to remain “off the grid”?

      The Israeli daycare example you mentioned (either from Freakonomics or The Undercover Economist … can’t remember which) is interesting too. There, setting a price on a behaviour “legitimized” it in the minds of the individuals because it articulated a cost (or penalty) clearly, even though it backfired on the daycare to an extent. Coming back to your point about having a menu of privacy, I initially agreed with you about the devaluation (or commodification) of privacy by putting a price on it, but I can’t shake the notion that there is a benefit to clearly articulating both sides of the exchange, which does not seem to be the case today.

  6. Paying for privacy as such is not a tangible rewardaing payment system because you pay for an abstract notion that you don’t have a way of knowing what you really paid for. privacy is a maeans of data sharing/witholding. If the payment was for sharing and not for keing privacy, and the the currency would be in data exchange (context based alternative currency) e.g a movie without ads to download for 4$ but free with 3 targeted ads – that’s tangible and that’s a sharing choice. More on this system contextonomics in http://www.icentered.com/contextonomics. For that to happen 2 things must become a reality: a paradigm shift that will empower users with user based data control and proactive manangemnet of data sharing and privacy. This will not happen until there is a contextification layer that can serve as a reference base by which both providers and users can reference data and create a data based marketplace.

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