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?

Filed Under: customer service, free, internet business models, paid, product, users

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  1. icon
    mze (profile), 5 Feb 2019 @ 8:36pm

    Re: 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.

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