The Dangers of Being a Product Instead of a Customer

Gmail is almost certainly the most important web service I use. It has become the master key for many other tools and services. The scary part is that Google could close my account any given day, and I’d have no recourse because I’m not a paying customer.

Twitter is a service that I use perhaps too much. I have a relatively small but stable audience accumulated over the years. I broadcast a question or a thought whenever I feel like it, and it has become one of the main channels I use to exercise free speech. Again, Twitter could close my account on a whim because they owe me nothing.

Facebook would also fall into this category if I cared, it just happens that I don’t.

So Long Posterous, and Thanks for All the Bits

If you follow this blog you may notice that I’ve migrated it from Posterous to my self-hosted installation of WordPress. I loved Posterous; I thought it was simple, pretty and convenient. However, the quality of the service had degraded noticeably after the Twitter acquisition (e.g. I couldn’t even reply to comments on my posts the last few times I tried). Still, it wasn’t that bad. I could have kept using it while waiting for an easy way to migrate my posts. Twitter promised that “over the coming weeks we’ll provide you with specific instructions for exporting your content to other services.” And it’s only been 21 weeks…

Interestingly, what prompted me to move was a terse email from Twitter asking me to remove a small dataset of public data that I’d shared. There was nothing wrong with the email itself, all it did was point out their terms of service. However, if I had written that email I could have made it much more friendly, as I understand the value of PR (especially with developers and bloggers). It gave me a bad feeling about the inner workings of Twitter as a company. I wondered if one day Twitter might kill my Posterous blog just because, and I figured that I could easily host it myself. Unfortunately there is no alternative to the Twitter service itself (I’ve backed app.net but I don’t expect it to be even remotely equivalent).

My next step will be to associate my other services  with an email address at my own domain instead of gmail.com. I may still use Gmail behind the scenes, but I can always take my domain somewhere else. That is, assuming I don’t use *that* email address as the key to my registrar :)

For similar reasons I don’t contribute to Quora very often. The 15′ that I may spend on a question gives them much more value than I receive in return. As an aside, who knows how long they’ll be around for, or if they’ll ever come up with a business model. There is even a topic on Quora itself about this. How meta…

I’d much rather be a customer of web services than a product. I would pay a reasonable amount of money for a few things, especially if this removed undesired ads (I don’t care that much about that, because like most people I’ve learned to ignore the vast majority of them).

The problem is that there are not enough people like me. Most people don’t care enough about these issues to pay for the cost of the services they use (as opposed to being “product” and having no rights). There is also a perverse incentive: a service with hundreds of millions of free users is rewarded by the stock market or private investors because in theory they could find a way to sell something to all those “people.” For example, Facebook’s valuation is not justified by its current business model based on display ads. Even at today’s stock price, their price-to-earnings ratio is much higher than that of comparable companies with similar growth rates (see GOOG, YHOO).

Finally, one subtle point that bothers me about the current state of affairs is not that we are just product. That was already the case in the age of TV. Things have gone one step further; we now generate the very content that digital entertainment companies sell to advertisers and feed back to us. In other words, we are Digital Soylent Green.

 

8 thoughts on “The Dangers of Being a Product Instead of a Customer

  1. Diego, You’re comparing companies that charge their users (where users are “customers”) to companies that don’t (where users are “products”). Shouldn’t the comparison really be between platforms running open source software that could be run independently (e.g. WordPress.com/Wordpress.org) and companies that run proprietary products (e.g. Gmail, Twitter, Facebook)?

    Paying for a service doesn’t necessarily decrease the likelihood of a service shutting down or increase your recourse if it turns off your account (at least not under the standard TOS for most SaaS companies). We’ve been using Gmail and Twitter for free for years, and they’ve been pretty reliable. We paid (and would have happily paid more) to use Indextank but as you know it shut down. Many longtime paid Flickr Pro users (myself included) are suffering today due to Yahoo’s poor product management over the years.

    Having said that, I do intellectually like the idea of paying for the service that I use, and I’m glad to pay for Github, Netflix, etc. And I agree that whenever possible it’s good to have control (I also use my own domain with gmail, and I map my Tumblr to my domain). But empirically I don’t know that paying for a service (i.e. becoming the customer) alone decreases platform risks.

  2. You have a point. It is annoying and inconvenient when paid services are acquired and shut down. They can also go out of business, or decide to stop providing the service. That is how the business world works.

    My concern goes beyond that. I’m worried about a free monopoly that becomes a de-facto standard. With Gmail at least you can migrate to another email provider. Unfortunately there isn’t such a thing as “another Twitter provider.” If Twitter decides that you are “persona non grata” to them, there goes your ability to tweet (at least with your own identity).

  3. “Finally, one subtle point that bothers me about the current state of affairs is not that we are just product. That was already the case in the age of TV. Things have gone one step further; we now generate the very content that digital entertainment companies sell to advertisers and feed back to us. In other words, we are Digital Soylent Green.”

    I’ve long thought about this trend, and found it most disturbing.

    Not only are consumers themselves the content generators these days, they are also being trained to accept product without customer service, without service guarantees of any kind. Our own lives and experiences are being fed back to us with shiny packaging, in convenient short-attention span format. Very few seem to be concerned about this trend. The entertainment sedation works well.

    Value for many companies today is based solely on a prediction of future consumer consumption, not the reality of it. Collect as many Soylent Green future participants as you can, and your company is rewarded by the financial community.

  4. and–FB monetized us each ( according to my napkin calculation) at $4.11 in 2011. I would have paid them much more.

  5. ok maybe what I m about to say will sound like hippie nonsense but I dont care

    Its true that in the current state of society we need to make money to survive, and this raises all kinds of paradoxes where services that are used by millions of people dont make enough money to survive because depending who, how and why, asking people to pay is or is not “acceptable”.

    Truth is, paying is unnatural!

    I truly believe in my core that “soon” humanity will be moving towards a “give” economy rather than “exchange” economy. And the services that will naturally be there will be the ones that give more value to the user (ie gmail) and not the ones who manage to extract more gold from the users (cant come up with an example???).

    no matter how much people want to defend it and say money or exchange is necessary, it is simply not true. Imagine a tree charging for the fruits it gives, or you charging an old lady when you help her walk the street. Just not the way the universe works, its plain human fiction and as such illusion it will come to pass. The question is when , will it be it in 5, 50 or 500 years?

    So coming back to our issue, this leaves the guys who run the services and are not being able to get money from the users only one option: start devising weird, annoying, and maybe even evil ways to get money. In the side of annoying devices is to give more functionalities for people who pay (which really is limitting funcitonalities for non paying users). In the side of evil devises is selling your private information to corporations as is facebook’s case.

    This is 2 + 2 = 4 and for me its so obvious that that is the cause of the problem. But 99.999999% of the people on this planet are programmed to believe money is essential and this being the case, we are looking for solutions but holding on to the problem. This is like the story of Nasrudin, who had lost his wallet and was out in the garden looking for it. Then his wife comes and it goes like this:

    -what happened?
    -I lost my wallet.
    -and where did you lose your wallet?
    -Inside the house
    -and why are you looking for it in the garden?
    -because its dark inside and here I can see

    Well, thats my point of view! And I would love to know your view on this. Because with all the energy I put into writing this comment the least I would expect in return is some answers 😛

    • Marto, you agree today people need to make money in order to live in our society. Capitalism is pretty much global, and most people don’t have a choice. Running a service like Twitter or Gmail costs a ton of money, and the money has to come from somewhere. Saying that paying is unnatural is a non-sequitur, because “unnatural” doesn’t have a well defined meaning in your context. You could equally argue that Twitter and Gmail are unnatural. What is natural? Is a dam built by a beaver more natural than a house built by a person? Can you say that a tree “gives” when it doesn’t really have a choice?

      You could argue from a philosophical standpoint that the exchange of money is “unnecessary.” However, from the same viewpoint so are technology, humans, and the world itself. The cold hard truth is that nature is pretty cruel: animals eat other animals, and they inflict pain in doing so. The fit survive, the rest die mercilessly.

      Back to practical matters, the laws of physics still apply. You need to spend energy in order to walk or build a house. You choose how you spend your energy. You could spend it on yourself or on others, but if you choose the latter you have less left for yourself. Giving only works if everyone does it, and you end up with a game-theoretical scenario where those who “defect” (i.e. receive and not give) have an evolutionary advantage. This is discussed at length in many biology books, such as The Selfish Gene.

      • I remain unconvinced that running Twitter costs a lot of money. Social networks of Twitter’s size have been run for free long before. Take for instance, usenet–largely run by volunteers, and roughly involving a similar traffic level as Twitter. Unlike email, Twitter doesn’t need to store long periods of data, doesn’t need to be all that reliable.

        If Twitter went away today, it could be replaced in an instant.

        I remain unconvinced that the behavior of large companies you pay are any different than large companies that you use for free–either way, they are going to try to profit from you as much as possible.

  6. People are cracking their heads how to make facebook and twitter “profitable”, when all they need is to accept donations.

    Donation = giving != paying

    Donation is conscious, spontaneous and free giving to a valuable cause of your choice. Paying is freedomless, compulsory and demanded. The answer is always giving, never taking (or stealing).

    This is how you transform the taking economy into a giving economy. Donations is the transition step, and I think wikipedia is managing. Do something for the love, the service and the fun of it, forget about “profitting”, accept donations and pay your employees.

    Donations also make users conscious that they are receiving something out of the hard work of fellow human beings who out of their love are giving to them and they will appreciate and give back.

    So suddenly my hippie ideas about a giving world have come from philosphy into practical application, thanks for making me think!

    —-

    I think people who receive but dont give suffer the worst depressions !!!

    —-
    Btw, humans are half animal half spirit. Or you can say we are self conscious animals. We are constantly choosing between our lower and our higher nature. The famous fight of good versus evil.

    Its true that there is a universal law of “fighting for survival”, but this is a law that rules humans in their lower nature, and its transcended through moving to the higher law of service. This means we just do our best, offer everything as service to something higher, stop caring about how we are going to make ends meet, and be taken care of by same life that we are serving.

    This is the famous “renouncing of the fruit of the actions” from the Bhagavad Gita.

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