People or products: are we moving toward an internet where we pay for services?

My regular Friday column in Expansión, Spain’s leading financial daily, is called “People or products” (pdf in Spanish) and discusses whether changing tastes could lead to a decline in segmented advertising on social networking sites.

For example, what would happen if the market showed a clear preference for services such as Ello, with no advertising, financed via freemium models and that did not collect data on their customers’ habits, like Facebook does. Sure, Ello has a long way to go, and may well fall by the roadside, and we’re also a long way from seeing a mass exodus from such sites. But it’s also true that for some time now we’ve been seeing the emergence of social networks that make a point of respecting users’ privacy, and they are growing in popularity as a result; at the same time, younger people are showing a disinclination toward segmented advertising, seeing it as “creepy”. So what might happen if the trend continues?

The answer seems to be that if you have a service that people want, but at the same time, are turning away from you business model, the best thing to do would be to offer those customers the option of obtaining your service via a different business model. In this case, that would mean replacing advertising and data collection with some kind of annual payment. Depending on the amount of money involved, it could be that a certain number of people would opt for that model. This would allow the company to set itself apart from the competition and allow it to say to users who feel that their privacy is threatened: “If you don’t want advertising, here’s the alternative.”

Google’s Susan Wojcicki says the company is looking into a subscription model for YouTube for viewers who don’t want advertising. YouTube’s advertising is much more intrusive than other Google services, and seems to work pretty much along the following lines: “We’re going to annoy you to the limit interrupting what you’re watching with ads you don’t want to see, so that you will pay money to get rid of them.” And it might work.

As more and more people avail themselves of ad blockers on the internet, this is clearly an issue that isn’t going away. In some sites, particularly those with a majority of internet-savvy users, the percentage of users equipped with ad blockers amounts to more than a third. Would you pay for no advertising on YouTube, or would you simply install an ad blocker? And what about Google? Would you think about paying for a search engine with no advertising and that doesn’t store your information? These are questions you will soon have to answer.

Below, the full text of this week’s column.

People or products

One of the tenets beloved of diehard critics of the internet is that nobody wants to pay for anything on the web, and that it is awash with freeloaders prepared to do anything to avoid paying for services or content.

But the more advanced among us know that in reality, the more you use the internet, the more prepared we are to pay for something that has real value. Companies like Evernote, which doesn’t charge for its valuable services, but instead offers the option to pay, obtain very interesting conversion rates.

In the wake of Snowden and Assange’s revelations, we are seeing a growing awareness of the need for privacy: more and more users want to keep their data to themselves. The model whereby companies offer free services in exchange for using that data, or inundate users with segmented advertising, is proving less and less popular, especially among young people. The success of Snapchat and the interest in ideas like Ello seem to bear this out.

YouTube, a service that is valued by millions of users around the planet, but based on advertising that interferes with the viewing experience, is now considering a subscription model free of advertising.

Could Google, the company built on the exploitation of user data, now be considering a subscription model in response to the public’s changing concerns about advertising and the use of adblockers?

What price are we prepared to pay to avoid advertising and keep our data to ourselves? Are we prepared to pay a subscription to use Google without advertising and to prevent it from using our personal information? Do we want to return to being people, instead of products?

(En español, aquí)