Why Users Aren’t Customers

You can always count on the New York Times to sell eyeballs with Serious Opinions about the chattering class’s moral panic of the day. True to form, they published a red meat op/ed today on how internet platforms like Facebook, Google, Instagram and Twitter are diabolically making money with their users’ data, thereby corrupting democracy and otherwise destroying the world. Instead, says UNC’s Zeynep Tufekci, “Internet sites” should all build direct subscription options for their users that would allow them to opt out of “tracking,” enable encryption and be treated as a customer, not just a “user.”

This idea is completely unworkable. But understanding why requires you to understand what Facebook – and other social platforms – really are, and what they aren’t.

The most obvious rejoinder to this argument is, of course – go and try it! This is hardly an original idea. The problem you inevitably run into, though, is that social networks fundamentally derive their value from the network effects they create. The more people who sign up, the more valuable that network becomes. A paywall, however low, automatically creates a very significant inhibitor to new user growth and ongoing engagement with the service – let alone a pay-as-you-go system, like the one Tufekci proposes.

The more interesting insight, though, is that Tufekci believes that she, not Facebook, is really speaking on the behalf of hundreds of millions (or billions) of users. In this way, she is taking a classic position that is widely shared among the privacy activist community: that is, that users of free online services are simply ignorant of the true cost of seeing ads, are sacrificing their privacy, and are being misled by greedy social companies. Tufekci’s concerns about tracking, encryption and the like are grave enough that she is willing to pay to alleviate them, and assumes that lots of other people share her view. (The irony of Tufekci raising the alarm about user tracking on the subscription-supported NYT site, which still tracks all visitor behavior, is also pretty rich.)

I disagree that this is the case. I think that outside of a small group of very vocal activists (many of whom seem to be in academia), most people do not care that deeply about online privacy; or, at least, care enough about it to do anything, whatsoever, about it. The proof is in the pudding: while many people express “strong views” about privacy in surveys (like the Pew Research Center poll Tufekci cites in her article), none of those opinions seem to translate into behavior. Indeed, the very same research Tufekci cites also says that most Americans have little confidence that their information will remain “private and secure” with social media and search sites – indicating that maybe users aren’t so naive as she thinks.

By the way – it’s worth pointing out that Facebook’s DAUs have risen every single quarter, in every single geography, since they started releasing usage data. More people are using Facebook more often, everywhere – including Americans. Not exactly a strong argument that we’re all growing more privacy conscious.

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Tufekci also makes a lot of hay about Facebook only making 20 cents per user per month in profit. This is actually a factual mistake – the article she cites actually says 60 cents (c’mon, NYT fact checkers), and Facebook publishes its own ARPU numbers. Of course, 60 cents in profit per user, per quarter with over a billion users would be a pretty good figure anyway – and using total users makes a lot less sense than daily active users (936 million in March), which would push that figure up a good deal. But it doesn’t really matter, because this figure is pretty meaningless anyway.

Facebook, like other social platforms, sells ads against connections and communities, not just individuals. It does this primarily by acting as a media site – not a consumer business. That is, you and I are not Facebook’s customers. “Customer” is a status that Tufekci explicitly pines for because she wants her interests to come first, and not that of advertisers. And while understandable, no viable model to support that prioritization has yet been found. Until it is, we are Facebook’s product, much as we are for ESPN or NBC – eyeballs that the network can deliver to advertisers by also providing us entertainment that we like. As I wrote about earlier, as Facebook slowly displaces television as the media choice of a new generation, it gets to alter their relationship model with viewers. For the better.

Facebook – like Google, Twitter, or any number of others – provides an incredibly valuable service to humanity, full stop. Almost every privacy activist I know still uses these free platforms despite the perceived “cost” to their “privacy” – which, in my opinion, says volumes. To the extent that you can’t imagine life without Google, or Facebook, Twitter, Gmail or the like, you’ve actually validated the remarkable value proposition they offer, and which you agree to by using them.

Facebook will never offer a subscription model, and asking them to do so reveals a deep, fundamental misunderstanding of what Facebook is. Perhaps it plays well with NYT readers, but as an argument, it’s all but irrelevant.



One Comment

  • Reply Wayne Teigen |

    Great post Blair. I think even more to your point is the government intervention in the EU to “protect” online users. Instead of curtailing online data collection or ushering in a new era of digital interaction guided by privacy concerns, what we now have is an online message that pops up on all EU sites that explicitly state that by using the site, the user is giving the website permission to collect user data. Customers still navigate those sites–further evidence to your point that “most people do not care that deeply about online privacy; or, at least, care enough about it to do anything, whatsoever, about it”.

So, what do you think ?