Tuesday, 12 March 2013

Monetizing You

Jaron Lanier, the computer scientist and writer, has been busy explaining that we need to reward each person for the data they reveal or post on the Internet, otherwise it will become unsustainable as an ecosystem. This idea perhaps chimes with the EU's requirement for much more explicit consent to 'cookies', futile as it has proved to be so far. Could we see the advent of paid-for marketing cookies, or will technology evolve to get rid of this problem entirely?

To date, the debate about the future of the Internet has largely been driven by investors, principally, who have insisted that online businesses generate short to medium term profits. Fearful of killing off a nascent commercial channel, most Web 2.0 giants have clustered around the advertising model, making their services 'free' to the consumer, and leaving advertisers to pass on the cost of marketing, as happens offline. Others have adopted the 'Freemium' model, in which perhaps only 10% of customers are relied upon to pay for extra functionality and so on, thereby subsidising a free ride for the rest. Indeed, Jakob Nielson has estimated that:
"In most online communities, 90% of users are lurkers who never contribute, 9% of users contribute a little, and 1% of users account for almost all the action."
But since the dawn of television, in particular, advertisers and ad agencies have been on a quest to figure out who sees their advertisements and how to target their ads ever more accurately. The open nature of Internet technology and the advent of the 'cookie' has made it easier to follow users from site to site, targeting advertising at them along the way, and some internet service providers have gone so far as to filter traffic as it passes through their services. 

Now it's one thing for advertisers to rely on data from your TV set, but people are understandably less comfortable about being followed around all day and having their every preference logged. Jaron Lanier says participants should be paid for that privilege, and I have to agree. Unless participants feel they are being compensated directly enough, they will stop participating online - to the extent they have the choice. This is not just a matter of persuading the 1% to remain high content contributors, or the 10% to actually pay for stuff in the Freemium context. The other 90 to 99% also need some recompense for agreeing to reveal evidence of their behaviour. Great service may be enough in some cases, but otherwise people will surely want a fairly direct economic return for disclosing their location etc., whether in the form of cash or some other sufficiently direct economic benefit, like genuine discounts or cost savings.

While a legal solution seems rather unlikely, the battleground is at least becoming more defined as the European Commission struggles to hold the perimeter of its (unduly broad) General Data Protection Regulation. Unfortunately, the media appears to be naively positioning this as simply big business against the individual, equating BT's interests with those of US retailers. But this fails to recognise that old world institutions, like the telecommunications companies and traditional media empires have the knives out for the revenue streams enjoyed by facilitators like Google, Facebook and others. Yet it's also important that the interests of consumers are represented in a balanced way, rather than by unduly paranoid consumer advocates or European Commission officials zealously toting their single market fantasy. The European Parliament isn't exactly the best candidate to stand in for the pragmatic consumer...

However, for any problem on the Internet it's always worth looking for an acceptable technological solution before a legal one.

The first is the addition of payment features within online games and other applications. In-app payments are increasingly common, but there is a lot more scope to make it easier to charge for content. It's not enough to be able to host advertisements on blogs or email. We need low-friction features to enable direct payment without erecting pay walls, like the TipJar on Vimeo. Others, like HonestyBoxx, are enabling people to monetize their advice by adding an application to their blogs and and personal web sites. But now that we've been forced to endure all these 'cookie' consent boxes that hover around European web sites, why not add payment functionality to sweeten the deal?

Of course, all these solutions suffer from being human-readable, and I believe that the Internet will evolve to remove the issue altogether. As I explain in my recent article for SCL, once product data is published in machine-readable format, the marketing challenge won't be to find customers, but to enable products to be found by customers' machines as required. In a 'Linked Data' world, our computers won't need to disclose anything about us. Our own personal 'spiders' can run around the Internet collecting and analysing openly available data and reporting their findings to us personally. As a result: 
 "a combination of Midata, Open Data and Big Data tools seems likely to liberate us from the tyranny of the 'customer profile' and reputational 'scores', and allow us instead to establish direct connections with trusted products and suppliers based on much deeper knowledge of our own circumstances."

Image from TheTechStuff.


Marie Steinthaler said...

Good post. There are some services that already reward users for giving access to their personal data, though it's not openly messaged to be an exchange of that kind. They also rely on you being active/present on social media, which is exactly what Jaron is recommending you do not do.

I strongly agree with the saying "If you're not paying for it, you're the product" - though from an 'ecosystem' point of view, does that necessarily make it unsustainable? After all, you are being "paid" in a way, as you ARE receiving a free service. As long as the two parts are equivalent in value, is there still a balance?

There are alternatives like, who have made it very clear they want to charge a price for your membership of the social network, and not monetize by selling your data. They put a value of $5 per month per user to their service. Facebook's equivalent was c. $0.5 per month per user in Q4 of 2013 (apparently).

On a different note (though I was reminded of this piece by the point on being paid for allowing cookies), have a read of this post by Esther Dyson on the case for pay-to-email as a method to reduce spam and increase engagement with the format. Would be interested in your thoughts on this!

Simon Deane-Johns said...

Hi Marie!

Thanks for taking the time to comment, and the various links. I will explore and come back to you asap!


Mark Bower said...

Thanks for mentioning HonestyBoxx. We shared your blog on Facebook and Twitter by way of Thanks :)

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