Derek Powazek exposes the meaninglessness of the already overused tripe ‘If you’re not paying for the product, you are the product’. “But we should not assume that, just because we pay a company they’ll treat us better, or that if we’re not paying that the company is allowed to treat us like shit. Reality is just more complicated than that. What matters is how companies demonstrate their respect for their customers. We should hold their feet to the fire when they demonstrate a lack of respect. And we should all stop saying, ‘if you’re not paying for the product, you are the product’, because it doesn’t really mean anything, it excuses the behavior of bad companies, and it makes you sound kind of like a stoner looking at their hand for the first time.” Nailed it.
It isn’t meant as an excuse. It is meant to describe to people what is actually happening in a way that they understand.
And yes, many of us understand that it isn’t always true. It is a bad idea to pay for a service that you can get for free because it is possible for a company to sell even more information about you. Likewise there are many companies that will give stuff away for altruistic or selfish reasons, but will never treat you as the product.
Still, some of the most successful online companies out there are using you as a product. People need to know that, so the over simplification will persist.
But it is also patently untrue on MANY levels. It gives the false impression that if you pay for a service, then the company isn’t doing you rotten. But as we have seen with cell phone companies and the carrier iq debacle, this is not the case.
What we really need to do is start educating people that ANYTHING you put on the internet without strong encryption is public, regardless of what the privacy policies say. And even if you post it anonymously, it can almost always be traced back to you. Is this right, though? Shouldn’t we have a right to privacy? Well, you wouldn’t leave $500 in the front seat of your car unlocked, and then complain that somebody shouldn’t have stolen it, even if they really shouldn’t have. The point is that they can, and they will.
It’s time to start using some common sense, and realize that ALL companies can and probably will sell your data/personal info to the highest bidder. And if you think we can just pass a law to stop it, you’re dellusional. Laws haven’t done a really good job of stopping people from sharing copyrighted material, and there’s usually not even any money involved in that. It’s like I said in another post – the internet makes anything shareable, whether you want it to or not, so we might as well learn to deal with this new reality, instead of pissing into the wind and trying to stop the inevitable.
Edited 2012-12-20 02:51 UTC
Right on! We need to understand that “not paying for a product” is neither a necessary nor a sufficient condition for being a product.
We also need to understand what “being a product” actually means. Not much, if you read TFA.
I for one am glad this sort of populist explanation for shitty behaviour is getting some detractors. I’m sick of hearing this crap about how great App.Net is going to be simply because people are paying for it.
Everyone is seeing how War Z is going down, and that’s very much a paid for product.
I never understood why so many supposedly smart people were getting excited about App.net.
You want to pay for something you can trust and you’re willing to be incompatible with Facebook and Twitter anyway?
Get a cheap VPS or some shared hosting for $3-10 per month and run your own federated node using something that speaks OStatus like StatusNet or Diaspora.
Surely someone is willing to offer a CPanel setup which can install them for you if you have no experience installing web apps.
Hell, you can also self-host various other web apps in the same space to get more for your money.
Edited 2012-12-20 00:36 UTC
Ahhh, the ‘Grube, it all makes sense now. I knew I recognized the familiar stench of trite, hipster faux-wisdom and pretentious pseudo-intellectualism, but just couldn’t put my finger on it.
If you can’t spot the sucker, it’s you.
In modern business: it’s you.
The overall point of the article is sound, if a little obvious.
I will say however, that many people are misinterpreting user’s reaction to the instagram changes. Sure there are sheeple who think their photo’s will be slurped and sold by instagram, which was clearly never the case. However, there are many people, myself included who have a fundamental problem with the principle of being ‘forced’ to handover licenses of your photos, even on a private accounts.
That nothing is truly private on the internet (crazy encryption + obscurity aside) isn’t the point. If a service says “this account is private to only those you allow” and then says “but we’ll take a copy of every picture and *maybe* use it” doesn’t cut it.
As has already been pointed out recently on the comments section, this isn’t about controlling the spread of your content, it’s about controlling it’s *legal* use. Just as people (mainly on this site
) get up in arms when companies violate GPL T&Cs, many content producers on Instagram are up in arms about this content grab)
Back to the article, to be sure there are paid services that are rubbish. But for now, flickr as a paid service makes zero claims to your content (in fact they help you understand how to license it to suit your needs) and has a fairly good track record.
Paid doesn’t mean good. But alas, “free” generally means advertising, which means you’re behaviour IS the product being sold. There’s got to be more to the internet then bloody selling ad space. As the article suggests, i’m voting with my feet. If after 30 days, instagram doesn’t change it’s policy for the better, i’m out of there. Fortunately, i’m under no illusion that my photos will be missed much
Whether paid or free, it does help to read those pesky dry T&Cs.
— excuse the usual typos .
Edited 2012-12-20 09:27 UTC
This is a case of wishful thinking on the modern Internet. It’s also a case of rambling, since the phrasing “if you aren’t paying for it, you’re not the customer, you’re the product” doesn’t have anything to do with the respect every customer deserves. It just describes the simple reality that, if you are getting a service for free, the company obviously can’t live on offering that service. The company has to live on something else — and in the particular case of Facebook & co., it lives on what users *do* with that service. Which really is exactly what it sounds like — what users do is what Facebook sells.
> But we should not assume that, just because we pay a company they’ll treat us better, or that if we’re not paying that the company is allowed to treat us like shit. Reality is just more complicated than that. What matters is how companies demonstrate their respect for their customers.
True, but then again, when you’re paying, you have at least a minimal reasoning behind asking for the respect you deserve as a customer. First, because — given that you are paying — you’re a customer, which you aren’t when you’re not paying. Second, because most human beings are evolution-trained not to be complete assholes and therefore don’t complain if a free beer isn’t exactly the beer they wanted.
> We should hold their feet to the fire when they demonstrate a lack of respect.
For every technology-educated “we”, who sees blatant breaches of privacy as lack of respect, there’s swarms of pretentious hipsters for whom respect only new gizmos in Farmville or whatever animated hysteria has caught up recently. When there are so few users who would hold their feet to the fire when they demonstrate a lack of respect that losing them wouldn’t cause too noticeable a dent in their sales, it kind of becomes difficult to do it.
Edited 2012-12-20 10:02 UTC
Did you also read the other 2 articles:
http://powazek.com/posts/3250
http://blog.pinboard.in/2011/12/don_t_be_a_free_user/
If you had read all 3 articles, you might find that organisations should have a business plan and they should be very clear about what that is and what their plan is when they grow.
I think that makes a lot of sense.
Here’s the deal. Aside from comparing his opposition to stoners right off the bat, he’s also arguing against all sorts of meanings he thinks this “tripe” means:
This is new or unique to the internet. No one argues that.
You’re either the product or the customer – he uses a newspaper, a physical product, to negate this. The whole ‘tripe’ refers to services where the users’ data – personal details, content, media, interaction with other users is used to sell ads and is sold to third parties, not a physical product with ads.
However, even a physical product that isn’t selling ads is be less biased or impartial and might represent it’s users better. By selling ads, any product or service sacrifices some integrity of itself, and, by proxy, of its users for the advantage of making more money (or reduce price to the user, returning us to the aforementioned ‘tripe’).
Companies you pay treat you better.
I wish. The best treatment I get these days is from fellow users of FOSS project I use personally and for work. However, not related to the ‘tripe’, as its not how they treat me, but what they use me for.
So startups should all charge their users.
There’s a valid argument saying that the free/ad supported medium is forcing its practitioners towards more unethical behaviour. However, this isn’t what the ‘tripe’ is about, but rather a warning to users of free services and a reminder – the service giver needs to make money from somewhere.
Finally: “And we should all stop saying, “if you’re not paying for the product, you are the product,†because it doesn’t really mean anything, it excuses the behavior of bad companies, and it makes you sound kind of like a stoner looking at their hand for the first time.”
This manages to be both derogatory, and to show that the writer missed the whole point in the saying. As someone said regarding Orwell’s 1984: “Its not supposed to be an instruction manual”. Same here, its not an excuse, but a warning. It means that the price of using free services that are created by for-profit organisation is that the service giver now needs to generate revenue from other channels, mainly selling his data, that is his users data, that it yours and mine statuses, images, likes and shares, comments and posts, addresses and phone numbers to its real customers, the advertisers, making the users the product. It is full of meaning and very potent, see the recent Instagram fiasco.
“. Same here, its not an excuse, but a warning.”
+1
The writer doesn’t actually miss the point. His point is that this doesn’t have one whit to do with whether a company charges for its services or provides them for free. The only thing that matters is whether the company in question has or doesn’t have respect for its customers. Companies which don’t will sell their customers’ data, regardless of whether or not they charge.
Case in point: American Express. American Express, back in the 1980s, began creating lists of its cardholders’ spending practices, matching them to shops, and *selling* the cardholders’ details to shops on the basis of their shopping patterns. So if you used your card to buy big ticket jewellery items, they’d sell your details to luxury stores, who’d then bombard you with offers and spam. Note that this was done to paying customers and started in the days before the web. You’ll find the details in Dwyer v. American Express 652 N.E.2d 1351 (1995).
On the other hand, you have a site like OSnews, which could easily build up fairly detailed profiles about us through sophisticated content analyses of our posts and clever tracking. It doesn’t do that and it never will under current management, because the people who run it have respect for the website’s users as individuals, not as random blobs of data to be harvested.
That’s the essential point Powaz was making – this is a question of whether the service provider in question genuinely respects its customers, not of whether it charges them or how much it charges them.
Why does this issue matter? It matters because what one is seeking (at least I am ) is an understanding of the dynamics that drive the tech markets and the giant tech companies that dominate them. A critical key to understanding any of the big tech players is understanding the core dynamics of their different businesses models which in turn drive their strategies and behaviours. The businesses model of company is that which governs the way the company makes money, earns revenues, and generates profits. What does it sell and too whom and how? Where do the bulk of it’s revenues and profits come from?
In the case of Apple their core business is selling devices, it’s where Apple makes the vast majority of it’s revenues and profits, and everything Apple does can be seen as a way of driving those device sales. It’s strategy for selling devices is to create a small range of distinctive, high value added, well made, well designed and easy to use devices with a high degree of interoperability and all tied to a very deep and bespoke value stack (a global retail network, good customer support, a digital content store, digital creations tools, business tools etc). The aim is to innovate product iterations fast and sell at a premium profit but to a mass market and which entice hundreds of millions of people to ‘join Apple’s club’. In order to achieve all this Apple aims to control as much of the elements that make up it’s customers experience of it’s products as possible, from the silicon to the retail experience.
In the case of Google their core business is selling targeted advertising, advertising that can be tailored to both the tastes and interests of the specific individual viewing them as well as the context and location of the viewing. It’s strategy for selling advertising is to gather the most complete and best data about the targets of advertising right down to specific knowledge about hundreds of millions of individuals (what they correspond about in their emails, what videos they watch, what they search for on the internet, where they are going and what they doing when they get there). Google then compliments this data with very easy and attractive mechanisms for the hosting and buying of advertising. Google’s aim is to secure the data it requires for it’s products by creating and offering for free numerous free and attractive software and services that entice people to voluntarily let Google watch what they do and to collect and store that information.
In the case of Microsoft their core business is selling software licences, primarily to other enterprises including OEMs and to a much lesser extent to individuals. Microsoft managed very early on in the PC era (even before Windows) to achieve a very large footprint in the PC operating system market and then used that position to develop a series of interlocking software products that became standards for the PC industry and which allowed Microsoft to sell hundreds of millions of software licences and to charge a high price for each one. Given that business model Microsoft naturally had no interest in the spread of new computing standards that it did not control.
From all this I would draw the following obvious conclusions.
Apple will be very sensitive to anything that threatens or encroaches on it’s control of it’s products stacks and on it’s distinctive product designs. Apple is not good at sharing.
Google will always prefer everyone to share all their data, especially with Google, and will always see any data it cannot access as a problem. Google is not good at privacy.
Microsoft will always want to sell software at a high price and to control software markets. Microsoft is not good at competing in markets it does not control or at respecting standards it does not control.
Tony Swash,
That’s a pretty good assessment of all three cases. To add to that, all of them will need to evolve.
There might be a point at which apple determines that it needs to focus on squeezing more profits out of services than devices. Tablets and smart phones are very likely to become commodities like desktop computers did.
Google services sold directly to end users have been met with limited success, but if their advertising model were seriously threatened they’d have to make better attempts at getting into more direct end user transactions.
Microsoft still has lots of lock in advantages of course, but that’s becoming much less effective as everyday users and businesses rely on more web based services.
While all three companies will probably be recognisable in a decade’s time, I doubt any of them will be able to stand still.
The mobile device revolution is now well under way, at some point soon there will be more than a billion Android and iOS devices being used and Android will sometime this year pass the installed base of Windows, and so we can I think begin to see some patterns emerging which will probably shape the fortunes and fates of the big tech players.
This is what I can see:
Services, advertising and software are not a big revenue generator in the mobile space. The most successful app store, Apple’s, has paid only about $7 billion dollars in revenue to developers in the four years of it’s existence, Android apps have paid a fraction of that. Non-app sales (digital content such as music, films, TV etc) do not seem to generate any significant profits, less even than apps do.
Advertising revenue is also very low on mobile devices compared to desktop PCs. Google made around $2.5 billion on ads in the US in the last year and only about $315 came from mobile and over half of that came from iOS so that means total Google earnings from mobile ads runs to only about 6% of it’s total revenues. And that’s in a market where smart phones have already reached 50% of the market. It’s looks like the best Google can manage in any market, assuming optimum conditions of 100% smart phone penetration, is around 13% of the revenues it earns from the traditional desktop/browser.
Microsoft has, so far, gained zero advantage in the mobile markets from it’s dominance on the desktop. It has almost zero presence in phones or tablets. Windows 8 and Surface could change that but there is no evidence it is and the mobile software market, which is now the dominant software market, has led to a very big reduction in the price (and hence the margins) of software.
In general almost nobody is actually making any substantial profits in the new mobile device markets, which is very surprising given it’s size and growth rates.
The only two companies making any substantial profits are Samsung and Apple with the latter substantially out performing the former in terms of commercial performance.
Both are making those profits selling hardware.
All the above could change but there is not evidence of any change happening so far.
Tony Swash,
“In general almost nobody is actually making any substantial profits in the new mobile device markets, which is very surprising given it’s size and growth rates.”
We can agree that mobile device users will spend less than their desktop counterparts. People will spend $$$ for PC games/accounting software/multimedia editing/etc, but there remains a stigma paying so much for similar software on a phone/tablet.
“Advertising revenue is also very low on mobile devices compared to desktop PCs.”
That’s curious. There could be behavioural differences like desktop users being more likely to browse random ads for some reason. Also I know many mobile phone/tablet users who prefer their PC over mobile for web browsing, which could be a factor in increasing mobile market share and decreasing the ratio of mobile advertising revenues.
“Microsoft has, so far, gained zero advantage in the mobile markets from it’s dominance on the desktop. It has almost zero presence in phones or tablets.”
Time will tell.
“and the mobile software market, which is now the dominant software market, has led to a very big reduction in the price (and hence the margins) of software.”
I disagree there, or I guess it depends on how you measure the market. There may be hundreds of thousands of devs writing countless mobile apps, but these are predominantly small-time operations with much smaller sales, less support, and less comprehensive solutions. I think traditional channels are still king of the software industry.
“The only two companies making any substantial profits are Samsung and Apple with the latter substantially out performing the former in terms of commercial performance. Both are making those profits selling hardware.”
I don’t believe the situation today will last though. As the mobile market matures they are going to find that selling the hardware will become less profitable. If apple keeps it’s prices too high for the market, it will enable competitors to eat their market share. But who knows what they will do.
“All the above could change but there is not evidence of any change happening so far.”
I have an idea of what I’d like to happen, but it’s all speculation. Nobody knows for sure, but I guess that’s part of the fun. If we knew our fate, we’d probably be bored of it already.
Regarding the idea of ‘If you’re not paying for the product, you are the product’ and talking about how it isn’t ‘new’; what he seems to ignore is the fact that the internet has made targeting marketing a whole lot more sophisticated and thus a lot more powerful/valuable to the person selling the demographic details and the company wishing to get access to said demographics. You may sell a magazine in the real world but do you know the break down of your readership? if you have a stamp collection magazine – should the advertisements purely be for stamps or things that are non-stamp related? if so, how would you know what does and doesn’t work if you don’t have that real time demographic information?
Regarding the ‘If you’re not paying for the product, you are the product’ and his statement ‘And just because you pay doesn’t mean you’re not the product. Cable TV companies take our money and sell us to the channels, magazines take our money and still sell ads, banks and credit cards charge us money for the service of having our money.’ which ignores the fact that it no way makes the end user the product – the end user BECOMES the product when the said companies started selling demographic data to those wanting to place advertisers so then particular demographics can be targeted – and sorry with cable television you can’t do that, you can’t say to said cable company, “I only want to target people between ages of 25 to 30 with a minimum of a bachelors degree with an income over $30,000 and are in a same sex relationship” where as in the case of Facebook such can be narrowed down – I have ‘interested in males’ on my Facebook hence I’m the product sold by Facebook to the ‘gay dating site’ who wishes to only target people like me.
Sure, cable TV companies can’t do that. But credit card companies can do precisely that and have a history of doing so. See my comment about American Express above. All this was well known and a real concern long before the web. The UK’s first Data Protection Act was passed in 1984, amid concern over the fact that computers would let companies mine customers’ data in ways which could seriously infringe their customers’ privacy. Needless to say, at the time these were all paying customers.
Calling someone a product feels wrong and unethical but it is just stating a fact – that businesses collect, use and trade information about us. Yes, the prices vary (in general case between zero and infinity) but that’s what prices are in any market. What matters is the price at which bulk of transactions takes place.
Being a product doesn’t also mean that businesses will treat us worse than customers. If a company has few products and a lot of customers the products automatically become more valuable.
When we think about people being products we tend to label them “slaves”, at least in our subconsciousness. But that’s not true either – there is no exploitation involved, and we choose if and who we give our data to. If anything, it is very much like dealing with agents on a job market, insurances etc.
So, yes, we are products anytime we give our data to others. Information is valuable, the company will use it, either internally or collaboratively with others. We don’t know what will happen but the usual market rules apply (“you get what you pay for”). In particular, if the company’s business model relies on charging money for accessing its resources, it may be less inclined to misuse information about us than a company which gets money mostly from other sources.
ndrw,
“When we think about people being products we tend to label them ‘slaves’, at least in our subconsciousness. But that’s not true either – there is no exploitation involved, and we choose if and who we give our data to. If anything, it is very much like dealing with agents on a job market, insurances etc.”
I think it’s important to distinguish between a free choice versus a coercive one. This is an extreme example for the sake of illustration:
One day a homeless man might walk up to you and ask for money with his cup, you have a free choice to give him money or not. Another day a robber walks up to you and asks for money with his knife, you have a coercive choice to give him money or not.
The free choice is independent of other factors: do you want to give him money or not? The coercive choice is a trade-off and often involves a penalty: if you don’t give him money, he might cause bodily harm.
Obviously there are various degrees of coerciveness, with bodily harm being at one end, and denial of service being at the other. But ether way it represents a non-free choice.
Much to my dismay, the android APIs explicitly force users to make coercive privacy choices over free choices when installing applications. In order to run an app I have to “choose” to give it access to my email contacts even when I’d never really choose to do that freely. There’s CyanogenMod and possibly other patches to fix this, but it does show google’s preference for coercive user choices.
Derek Powazek really puts a lot of effort into debunking some assumptions… that noone said and which clearly aren’t part of this rule of thumb. And that’s just what the sentence is. It’s not some kind of physical law, ffs!
I especially hated his “Assumption: Companies you pay treat you better”, because it rests on a false dichotomy. Again, the rule doesn’t say “paying = better treatment”. You can’t conclude it from the rule either. Thus, it’s BS.
Essentially, the entire article can be summed up as “author misses the point of the ‘tripe’ and debunks stuff only he interprets into it”.