Stop Saying 'If You're Not Paying, You're The Product'

from the there-are-more-options dept

We just wrote about how silly it is to argue that companies you pay for their services or software somehow treat you better or are more “aligned” with user interests than those who give you products and services for free. When you dig in on the subject, such claims don’t make any sense. In both cases, companies have some alignment with users — because without users, they’re nothing — and some alignment with trying to make themselves money. And sometimes those two alignments conflict, whether or not the user is paying directly.

Derek Powazek (random trivia: whose work inspired me to learn how to create a web page back around 1995 or 1996 or so) has an excellent take on the pithy and dismissive phrase that many often use to argue that free services treat users worse:

“If you’re not paying for the product, you are the product.”

It’s pithy and clever… and wrong. Powazek dismantles the claim eloquently. He attacks the underlying assumptions in that statement. He highlights that “free with advertising” has been a pretty big business for a long long time, in which there’s no indication that users were treated as “the product” or somehow treated poorly. And then there’s the key one: this is not an either/or situation:

I’ve worked for, and even run, many companies in the last 20 years with various business models. Some provided something free in an attempt to build an audience large enough to sell advertising, some charged customers directly, and some did a combination of both. All treated their users with varying levels of respect. There was no correlation between how much money users paid and how well they were treated.

For example, at JPG Magazine we sold something to our audience (magazines, subscriptions, and ultimately other digital services) and we also sold ads and sponsorships (online and in print). We made it 100% clear to our members that their photos always belonged to them, and we had strict rules for what advertisers could do in the magazine. We also paid our members for the privilege of including their photos in the printed magazine (as opposed to Instagram’s new policy that they can use your photos however they want, even in ads, without paying you a dime).

This example is much more complicated than the black and white “you’re the product” logic allows. In some cases, users got the service for free. In others, they paid us to get the magazine. In still others, we paid them! So who/what is the product?

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. Any store that has a “loyalty card” takes our money for products but gives us a discount in exchange for the ability to monitor what we buy. In the real world, we routinely become “the product” even when we’re already paying.

He also points out, as I have many times, that there are plenty of companies whose services you pay for who treat their users atrociously. And then points out what many of us have been arguing all along: there are all sorts of business models online. Some work in some cases, others work in other cases. But to argue that “free” services mean you’re “the product” and thus not treated as well, simply isn’t an accurate or realistic statement. So can we please agree to kill it?

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Comments on “Stop Saying 'If You're Not Paying, You're The Product'”

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Anonymous Coward says:

The Product

Try obtaining support from Google, or even finding a way to contact them at all. Unless it’s paid services like Google Play, you’re not getting any support from Google even though without you and others like you they would be out of business. Reason is that, from the point of view of the people who actually pay the bills, Google’s users are the product.

timmaguire42 (profile) says:

Your takedown doesn’t address the phrase as I’ve always understood it.

Businesses make their money somewhere. If you are using a service you don’t pay for, it’s because they’re selling the information they collect about you and feel they make enough from that that it’s worth it for them not to charge you. It is true quite literally.

But then, I’ve never thought it meant free means bad treatment. Apparently someone does think that’s what it means.

mickmel (profile) says:

Re: Re:

If you are using a service you don’t pay for, it’s because they’re selling the information they collect about you…

Not always. Look at Dropbox. 95% of their users get it for free, and they get great support and (as far as I know) none of their information gets sold. The idea there is to get them hooked on the product and want to upgrade later, but if you’re content using their free service (which tens of millions of people do), you aren’t a product in any way.

akp (profile) says:

I don’t think that *anything* free means you (the user) are getting sold out.

I think it is clear in Facebook’s case that the users *are* the product. Facebook doesn’t have anything else. All it has are the “social connections” and user demographics being leveraged to provide targeted advertising.

Dropbox has a product: Storage.
Instagram has a product: A useful app with photo processing (I’m not a user)
Facebook has… Nebulous social tools. And a history of nuking everyone’s privacy settings, making access to their demographics easier.

Powazek is right of course, but I’ve only ever heard the phrase in relation to Facebook, LinkedIn, Twitter, etc. Services where yes, the user base IS the product.

Anonymous Coward says:

With all due respect you’ve created a straw man and knocked it down. The original comment makes no mention of receiving a lower quality of service than a paid service or that other business models don’t exist that also productise you. You’ve added those negative qualities through your interpretation of the phrase and then refuted them.

Free with advertising has been big business for a long time, you are the product being sold to the advertisers to subsidise the content. The comment is correct in that context. The comment makes no claim that being the product is a negative thing in that situation. That’s your baggage from social networks where it often is a negative thing.

Techdirt highlights others doing this same thing all the time.

Eponymous Coward says:

Let's amend the statement...

“If you’re not paying for the value, you are the value.”

Though honestly I don’t get the outrage against being “the product” that some people have. Yeah, sure having your data used to better advertise to you has a high creep factor to it. But that isn’t all of what being “the product” is in my view, for instead of just being marketed to you and your output, as “the product”, are also being marketed to your peers. I originally thought of changing the saying to be: “If you’re not paying for the product, you may be the product or the producer”, but didn’t for I see it as a redundant statement for being the product of value and being the producer of value are one and the same in this sense. In the end I have no problem being “the product” marketed by a platform to potential users so that they to become “the product” and so on spreading our collective value.

artp (profile) says:

If you're not paying, the money is coming from somewhere

I agree that this is not linked to QOS, but it is probably too simplified.

TANSTAAFL still applies.

The money may come from me, from advertisers, from reselling my personal information, from charitable donations, from community effort, or any number of things. None of these are linked rigorously to QOS. All the permutations apply.

But when I get something for “free”, and the service provider is reselling my personal information, then I am indeed the product. When they keep changing the rules and denying me access to what they are doing with my personal information (a double standard), then I am indeed the product, and I have a HUGE problem with that. Others don’t. Good for them.

You picks your horses and you takes your chances. Me – I’m not a gambler.

Anonymous Coward says:

Your argument completely fails

You’re trying to say that since companies who charge customers also treat their customers like crap and companies who don’t charge their customers also provide service, that somehow the phrase isn’t valid. None of that disproves the phrase.

Every company which is for-profit, sells something. Whoever is paying, is the real customer. Nothing about level of service is going to change those facts.

That’s not to say that a company which provides people a free product/service in exchange for them ingesting ads can’t provide what you want in a product/service. But that doesn’t change the fact that you’re the product in that case.

Dee says:


This phrase is simply the modern equivalent of TANSTAAFL – “There ain’t no such thing as a free lunch.” In other words, no one ever gives anything out for free. The internet version of “If you’re not paying for the product, you are the product” simply highlights the fact that the entity giving you that “free” thing is getting something from you, even if it is simply the ability to count you as a subscriber, which could increase their profitability through advertising. Stop being so offended.

Anonymous Coward says:

Eh, you miss something here. If something is ad-supported, you very much are the product that the site is selling to advertisers. The point of the pithy statement isn’t to wrap up all transactions in a single sentence, but rather to cause people to think about the relationships they have with companies. In the case of new social networking entity who promises never to have ads – it should make one *really* think about what thing of value is being sold – and to whom – to pay for all of those infrastructure costs. It’s not that it’s nefarious, it’s that the relationships are sometimes hidden – which is kind of deceptive. At least ads are “honest” in that regard.

Gia says:


well, actually, they’re buying you with their free service. The give you the opportunity to store your info up to 5 GB for free in exchange of the chance that 5 GB sooner or later won’t be enough for you (it definitely won’t be at some point) and you will pay them to give you more space. You are the product and your price is 5 Gigabytes on their data machine 🙂 It’s only a matter of time – when you’ll be their paying costumer.


Dumb as hell

This is a complete straw man argument. You have no real basis for asserting what you assert. Basically you are attempting to lead people to believe your point of view without using logic. This is disgusting. More disgusting than the fact that people will follow your line of thinking. But not by much. Check your supposed intellect at the door and let your betters influence public opinion and discourse because you have obviously failed by posting this garbage editorial piece. Seriously, you are what is wrong with the world. Stop.

kevin (profile) says:

i think this means

i think this means… if you are watching tv.. (not hbo) but..networks or news programs or 24 hr news channels…… people imagine that those programs are there to “inform them” but, those people cater to individual people’s interests (irrational fear and bigotries) to garner their EYEBALLS… they are selling your eyeballs to the advertisers, to pay their bills and make profits for their stockholders. we dont pay for we pay comcast.. THEY pay comcast… they have to pay for all the tech and reporters or producers.. advertisements do that for them.. not you and me…. and what advertisers pay for is our eyeballs..

so they have highly focused propaganda shows like on fox …. to cater to a simple minded hate filled bigot rwnj… to get him to see the commercials they play.. to pay their bills… ergo… we are the product. thats why boycotting rush limbaugh’s advertisers.. he’s being dropped by several advertisers and even a few radio stations.

if you arent paying for it…you are the product.

its an apt assessment.

Bill Sprague says:

i think this means

I have learned (from Apple’s “privacy” policy) that ‘… A few years ago, users of Internet services began to realize that when an online service is free, you’re not the customer. You’re the product. But at Apple…’ Yeah, yeah, yeah. They still make lots of money don’t they? Privacy is not a dead concept. Neither is making money. I get ads all the time from the New York Times even though I pay them each month! The Customer Service Rep (there’s an oxymoron if there ever was one) just shrugged her shoulders. Turn the page if you don’t like the ad. Apple is sort of the same.

the d bulge says:

Scarecrow from Wizard of Oz

” There was no correlation between how much money users paid and how well they were treated. ”

How about, there was zero claims by the original statement in terms of treatment. The phrase doesn’t even remotely touch on the topic of treatment or value. You’ve essentially beat the crap out of a strawman that doesn’t exist.

Anonymous Coward says:

Free To Play MMO

Reminds me of the interesting case of being a resource but not the product. Having a sustained player base maintains the interest in the game for those who do pay. Players are effectively game content of sorts to make the world alive. Since even ‘whales’ who spend large ammounts don’t pay for a dead game.

Anonymous Coward says:

It is entirely inaccurate that it is not valid for the magazines. Just in their case it is “if you didn’t pay entirely for the product, you are partially the product”. They sell you part of the costs through smaller payment but that usually covers only printing and maybe some costs of the employees. The rest comes from advertisements. Just because it split cost doesn’t mean the above sentence doesn’t count. At the end of the day someone must pay. Businesses don’t pay for their costs out of thin air. The advertising or the direct sales are both models for monetizing the costs (and making a profit, what is a point of a business otherwise).

Linux is free? Please don’t get me started. The development comes for a disorganized bunch and the core is a mess. And that only works until young people figure out, hey I need to pay the rent here, can’t live in my basement with my parents. Then they figure out – I can’t make money of hours of work I put into Linux development I need a real job which makes me money.

mze (profile) says:

Stop Saying 'If You're Not Paying, You're The Product'

No, Mr. Masnic. I will not stop using that sentence. You are incorrect. And your inspiration is incorrect.

I’m not sure who you are trying to impress here but it ain’t me. Judging from the responses that you are getting here, they aren’t either.

I’m sorry but there is no other way to put it.

A man that runs a magazine publishing company may be worst person to serve as your inspiration. Talk about a conflict of interests. He may be intelligent and articulate but none of those things make him correct. It might earn him a following but that’s not the same thing either.

Print magazines present the illusion of the user paying for the services. They charge a newsstand price to cover the cost of distribution but their advertising revenue represents the cost of publishing.

No business and no business model can honestly cost nothing. Aside from profit there are bills to pay. Follow the money and you will find the source. It may be in the form of contributions or it may be in the form of a different source of revenue like advertising. Why do you think that they call it ‘junk mail’ or ‘spam’?

What’s more is that the advertising model has a long history so it’s easy to rationalize. There was Montgomery Ward catalog known as the ‘Dream-book’ It was a thick book that was nothing but a thick ad for M-W’s product line.

Next time that you want to publish a piece, Mr. Masnick, I suggest that you do a bit more research.

TxAg says:


And you don’t think Mike has a vested interest in keeping people online? His bias is seething in his articles. He’s the head of TechDirt and a digital think tank Copia. So yeah, he’s going to have a bias against the Netflix documentary. Is it a perfect documentary? None are but there’s a reason Mike is attacking it. It hurts his pocketbook. He even tries to trash people in the film with the idea they have a bias. That’s irony right there.

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