When the site is free, you are the product
Software isn’t cheap. Whether developed in basements, outsourced to contractors, offshored to India or elsewhere, funded by friends, families, fools or venture capitalists, it takes real people, real time and money to develop it. The developers, people in high-demand and high-salaried, expect to get paid for working. They don’t release applications for free because they are being philanthropic. The apps and sites are free because they expect to sell something entirely different as a product. In the 80s and 90s, independent developers or small programming shops made software and made it available for free under a concept called ‘shareware’. People who found the application useful were expected to pay for it and the amounts were usually small – $10-$50. People downloaded these applications and a relatively small number ever paid for them. Developers tried time-bombing apps, limiting features, etc. but never really seemed to recover a decent income. Then came the world of advertising where revenue could be generated by showing advertisements. Contextual advertising replaced that… with ads that were specifically targeted to the user and no longer generic.
The number of applications that suddenly became free in the past decade, however, is staggering.
Remember Hotmail circa 2000? You received 2MB of mail space and the company attracted users by millions. It was sold by the original developer for a mere $400 Million and served generic advertising for revenue. Then came Gmail in 2004. Google offered 1GB of storage for free and showed advertisements based upon the content of the message. Users ignored the loss of privacy and flocked from hotmail, AOL and other mail services by the millions for the massive data space made available to them for free.
Facebook, Instagram, Foursquare, LinkedIn aren’t doing anything they haven’t publicly stated before — they are selling you to their advertisers. If you don’t like it, cancel your account and buy the software for the service. Want email – Microsoft sells Exchange for an advertising free experience. Want photo management – Adobe sells Elements. Want to share photos – buy a domain and host your images for sharing with friends. Facebook is free. Gmail is free. Instagram is free. Pinterest is free. Words with friends is free. Yet, these companies are valued for real dollars on the stock markets and their owners and shareholders are living indoors, eating food they bought . What makes that possible is the product being sold by these companies — the USERS.
Users have been presented with the caveats in the sign-up screens. Check these out for yourself:
Facebook - “We use the information we receive about you in connection with the services and features we provide to you and other users like your friends, our partners, the advertisers that purchase ads on the site, and the developers that build the games, applications, and websites you use. For example, in addition to helping people see and find things that you do and share, we may use the information we receive about you:”
Linkedin – “We use the information you provide to… Create and distribute advertising relevant to your or your network’s LinkedIn experience. If you share your interactions on LinkedIn, for example, when you recommend a product, follow a company, establish or update your profile, join a Group, etc., LinkedIn may use these actions to create social ads for your network on LinkedIn using your profile photo and name. You can control whether LinkedIn uses your name and picture in social ads here.”
Pinterest – “The information we collect may be “personally identifiable” (meaning it can be used to specifically identify you as a unique person) or “non-personally identifiable” (meaning it can’t be used to specifically identify you). We use both types of information, and combinations of both types, as described above. We may use or store information wherever Pinterest does business, including countries outside your own.”
- We look at a person’s browsing activity, such as the types of content the person accessed, ads the person clicked, and searches the person conducted. Based on this, we infer certain interests the person has, and we show ads likely to meet the person’s needs. For example, for people who like to check out the golf scores on Yahoo! Sports, we may show ads that focus on golf-related products and services.
- We offer this service not just on the Yahoo! network but across our partners’ sites as well.
- Advertising is how we’re able to offer the innovative, free services that are traditional at Yahoo!. As we continue to customize your Yahoo! experience, you may see ads that more closely reflect your interests.
Foursquare - information collected includes … “We receive and store any information you enter on our Service or provide to us in any other way. The types of Personal Information collected may include your name, email address, phone number, birthday, Twitter and/or Facebook usernames, use information regarding your use of our Service, and browser information. We automatically receive your location when you use the Service…… ” and is shared with entities including “Agents: We employ other companies and people to perform tasks on our behalf and need to share your information with them to provide products or services to you. Our agents do not have any right to use Personal Information we share with them beyond what is necessary to assist us, and they provide a comparable level of protection for your Personal Information.”
These are just a handful of privacy policies from a few sites that are free to users because they derive revenue from elsewhere. Your favorite social network – Quora, Google+ and others probably have privacy policies that aren’t very different from above. Their revenue is generated when ads are served to the browsing user. The ads are neither free nor cheap and entire industries are built upon advertising. For example, if you are about to begin selling something in Iowa and want to target women aged 24-37 (young moms?), Facebook will let you configure an advertising to specifically target the 21,460 women who identify themselves as just that. That data is worth some serious dollars and was generated by you, the user when you uploaded the kids birthday pictures, invited friends to a party, or perhaps wished a Happy Birthday. Want to target specific audiences who visit specifc sites – checkout one such syndication network site’s blog list and how much each impression can be worth.
The bottom line remains – if the site is free, YOU are the product being sold. Put that lipstick on