The social network business model of the present day is being dissected in this micro-era of data theft. Perhaps it is time for our idea of that model to evolve into something more meaningful in the context of the value of personal data today.
I – The Beginning of the End (Of Take 1)
“We think offering people an ad-supported service is most aligned with our mission of trying to connect everyone in the world, because we want to offer a free service that everyone can afford. That’s the only way we can reach billions of people.” — Mark Zuckerberg, CEO, Facebook.
In recent press conferences, Zuck has never hesitated to profess his company’s business model. Simply stated, the idea is to offer a free service to users in order to serve their mission to connect the world, and this requires them to make money from advertisements. Advertisers will only sign up with Facebook when they are able to target their messages towards a specific target persona. In order to serve targeted ads, the account holder must give up her personal data, at no cost to Facebook.
Sounds reasonable at the onset — we are offered a service for free, and in return we give them our personal data. In fact, to some extent, offering up our personal data is the only way to really make use of this service. We even create and upload interesting content for other users, making this platform better than it’s competitors. We check-in from airports and restaurants, providing a direct insight into our lives, habits, and whereabouts. We send private messages to loved ones, trusting the service.
The point at which the fairness of this contract becomes debatable is when we see this data being misused, as has been the case in recent times. All of a sudden, there is a shift in the tide and people are starting to wonder what the value of their data really is, and whether it is unreasonable to expect them to be paid for it. The world is catching up and although Facebook may have been served a free breakfast platter, it doesn’t look like there will be free lunch for anybody. Something’s gotta give.
II – Need of the Hour
In the case of Facebook, Mark Zuckerberg claims the only alternative to advertisements is offering a paid version of the service. But is that really the only other option?
Thinking about this business model at its core – user data is a precious commodity. Without it, there would be no way the business can make money. Offering a paid version of the service is certainly one way to account for additional revenue that advertisements may have generated. But does that really take away all the concerns regarding mis-use of data?
Let’s take a step back and visualize a business model in which users aren’t left holding the social network site accountable for their data. One possible way to reach this outcome is by designing a business in which users are paid out in some tangible and concrete way for offering up their data to the business. This can then translate to ads or any other manifestation of that information. What if the next social network were to be one in which the site pays users for uploading their personal data (posts, media, check-ins, and the likes) and in return provides them with a platform for communication? The information can be sold and there would be no question of trust. We’re essentially saying it may be time to put a price-tag on data, and for an entrepreneur or product owner, now may be a good time to start thinking about getting those early-bird passes to the party.
III – Data Marketplace
This idea begins with social networks but easily extends to various internet-based concepts that are core to several varieties of business. Data is a commodity that users give away for free in today’s world. Yelp shows you sponsored results based on your previous selections. Search engines also use targeted ads from the data that users provide while using their “free” services. While this worked great so far, the fear of providing personal data has been consistently increasing among users, and there seems to be an increasing need for a vision on how to solve this problem in the future.
In 2008 things were different – users were naive. Hell, even the people working for Facebook were. But it’s 2018 now. Data may well be a commodity worth paying for! Advertisers and marketing teams resort to using social networks (and Yelp, and Google) as a preference to target their messages to people. The revenues generated from these ads are already the crux of how these companies make money. While the present system of taking user data for free starts to fade away, now may end up being a great time to start thinking about new services that value user data, by paying for it.
How exactly this business model may look is still an open question. But hey, if Facebook pays me a cent for every 5 likes I get, I wouldn’t hesitate to get back to building a more active social presence on their site again. And I sure as hell won’t complain if they sold my data to anyone – I sold it to them in the first place.