WHAT ARE WE PAYING FOR OUR FREE WEB SERVICES?

An Ominous Question – what is free?

If I were to ask this question 10 years ago (even 5 years ago), it would be passed off as a rhetorical question that has no real meaning, however today, it is a question we should all seriously consider.

In the advent of all these free web services (social networking/ photosharing/ blogging/ etc) and the rapid growth of companies like Facebook, Twitter and Instagram one has to start wondering- how do these companies grow so big in Market Valuation when they are offering a free service? What products are they selling and to who? I am certainly not buying anything from them as 100% of the services I get from them is free. So what is their business model?

The product is you (or your personal information shared through these webservices) and their customers are the big Advertising companies (they match the advertising content w/ your personal information).

What do you mean I am the product? 

I mean everything you share on Facebook, Twitter, Instagram and all other web-based services that are free- your age, the food you like to eat, the places you visited, the topics you like to talk about, the music you listen to, etc. All the information you provide these companies are gathered to create a profile of you and they match it to products that people with your profile are most likely going to be interested in. So do not be surprised to see a lot of Automotive ads on your Facebook page if you constantly like and share content that has something to do with Cars and you Constantly check-in at Car-Shows. This is not a coincidence it is by design. Tech giants likes Google and Facebook have mastered the algorithm necessary to process your data to better suit the advertising content you see on your web-pages. The better they are able to do this, the more money they get from advertising revenue. I hear a lot of discontent lately on the web about how these companies are abusing their customer’s privacy- but most of these complaints miss the whole point- you are not the customer in the first place. So next time you complain about your picture being used for advertising think about this question first- are you the customer or the product?

So does this mean I have no privacy on the internet?

It depends if you are smart about how you participate in these web services. One thing to know (I hope this calms you down), these tech giants process your data on aggregates. It means they do not reveal specific information about YOU to the advertisers. Their algorithms (mathematical computer programs) create a profile of you and your tendencies and that is what is matched with the advertising content. They do not send your name, phone number, address, date of birth, favorite food, your favorite “hang-out” place etc to the advertisers themselves. If you read the terms of service for any of these tech giants they will always mentions in their Privacy Policy/ Use of Information section that they will share your data only after it has been aggregated with others. This however does not mean you can just go about sharing anything you want to share thru these services. One thing to remember in todays age of Social media is that anything you post online instantly becomes public (no matter if it is private or personal). A simple screenshot, a simple slip up on your privacy settings and you can be doomed for good. That is why it is very important to read the Terms of Service and know how you can control the information you share on the internet.

The way the whole system is built today, the only way to be truly private is to live in a cave completely unplugged. We all know this is not possible and that we all have to participate in our interconnected world- that is why Vigilance on our part is the key. I myself have tried as many social media services available (Friendster, Myspace, Facebook, Bebo, Highlight, Path, Twitter, Instagram, Multiply just to name a few) because I love the idea of a social networking service and understand my trade-off. I limit the data I provide them but also know that in doing this I also limit the apps full functionality (like turning of location based services while using Foursquare).

What now?

The popularity of social media and content sharing applications on the web will only grow faster in the coming years. In fact,  I think it will only grow so fast that it becomes a necessity (like the cellphone/smartphone). As this happens, the question of who controls our privacy will become ever more relevant. Hopefully when we get to a point where opting out of these services becomes impossible, regulators will start to take a more involved role on internet privacy. When the time comes where these services becomes essential- it is important that privacy protection becomes a norm- not an option provided for the users. So for now, we will be in control of our privacy settings, but I am hoping that in the future privacy protection becomes a guarantee/ built in with these services.