Sunday, December 20, 2009

Would you pay for Facebook?

It shouldn’t come as much of a surprise that we spend the majority of our waking lives trading resources, participating in several economies. The simplest example of this is the financial transactions we make. We trade a limited resource, money, for other limited resources, good and services. Everyday at work, we trade a very limited resource, time, for money. In addition to fiscal transactions, we constantly trade on social markets. We do what we can to do nice things for others (writing a note to let someone know when we appreciate something, fixing friends’ computers, etc.) in exchange for people being nice to us in return. The nicer you are to people, the more social capital you accrue and the more other people will want to be nice to you. In this case, we are trading on intangibles: we’re trading time/effort for good will, and maybe eventually, time/effort in return. But perhaps the most fascinating exchange we trade on – whether we realize it or not – is with your Internet usage, where we frequently trade a limited resource, information about ourselves, in exchange for services like Google and Facebook.

Google trades us something we want, the ability to give order to the vast expanse of the Web, in exchange for a little bit of ourselves, the knowledge that we seek added to a database that makes Google smarter by the second. As Google becomes smarter (as it learns more about us), we trade on our privacy. Make no mistake, Google and Facebook are not free: you’re paying, just not with money. So, I ask this: would you pay some nominal monthly fee to use Google or Facebook rather than surrender your privacy with each query?

Targeted advertisement is the bread and butter of sites like Facebook and Google. It’s not a secret that Facebook ads are presented to us based on information that we provide in our profiles. For example, if you tell Facebook that you’re over 21 years old and list your zip code, you may start to get ads for bars in your area. If you list drumming as one of your activities, you may start getting ads for the newest, coolest snare drum. If you get an email to your GMail account that references baseball, you may start getting ads for Phillies tickets. If you search the Web for “Hawaii,” you may have ads for travel agents flanking your search results. These instances are examples of what some think of as the constant watchful gaze of “Little Brother.” Whereas Orwell’s “Big Brother” refers to government-to-citizen surveillance, this younger sibling refers to business-to-consumer surveillance – capturing information about customers for use in generating revenue.

But what if you’re uncomfortable with all of your information being sold to advertisers? After all, most of the info that we post to Facebook is password-protected, intended for friends and family. We consider our search queries to be private (even though they are not), a map of our thought processes and the information that we seek. What if we don’t want this information harvested and used in commerce? Well, then someone would have to pay for all of these “free” services that we consume. Someone would need to compensate Facebook and Google for their server resources and staff and perpetual innovation. That someone would still be us, except if we didn’t pay with the slow erosion of our privacy, we would have to pay in good old cash.
So, the question becomes, would you do it? Would you pay $5/month for Facebook and $10/month for Google in exchange for preserving some degree of privacy? You probably pay for Netflix now (am I being presumptuous? I assume that most people have Netflix). Conversely, would you take your Netflix for free if all of the movies you watched were cataloged and used to sell you DVDs? I suspect that in the future, we will have to make a choice.


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kortina said...

Chris, to answer your question, I would pay $5 (probably $15) per month for Facebook, and $100 or more per month for Gmail+Gdocs+Gcal. I'm happy to trade my search data to Google in exchange for relevant ads, primarily because this data does not aid anyone whose interest conflicts with my own. That is, there is no negative utility to exposing this data. In fact, I actually gain by sharing it, in the form of more relevant advertising. Where privacy *does* concern me, however, is any case where exposing some data about me is to my disadvantage. A simple exaggerated example is that I do not want business competitors to see anything strategic I share with my business partners. A more subtle example a friend once told me: he does not publish his travel schedule or Tweet about flying somewhere because he does not want to broadcast the fact that his wife and child are at home alone.