"To Regulate Facebook and Google, Turn Users Into Customers" -- Now in Techonomy

Techonomy has just published my latest article on the insidious problems with the ad-based business model for dominant Internet platforms (notably Facebook and Google) -- with a surprisingly simple, proven, market-driven, regulatory method for fixing that.

Yes, You are the Product …It Matters …and Can Be Remedied

“If you are not paying for it, you’re not the customer; you’re the product being sold.”

This compelling idea has been around for a long time because it resonates with many -- but it has been criticized as an oversimplification.  A Slate article by Will Oremus, "Are You Really the Product?," provides an excellent critique.

Here, I explain why this idea really is important -- as background to my previous posts on reversing the ad-based business model, and to a forthcoming article.

A simplification, but a useful one

The concerns Oremus addresses have validity and are important, but as a basis for management and regulation of dominant platforms (most notably Facebook and Google), this is a very useful simplification. Regulations of necessity are simplifications, but done properly, they simplify in ways that are useful and have limited downside.

It is true that being a paying customer does not assure that a businesses will be motivated to attend to the value you receive. Many fail badly in that regard, but the customer's power of the purse is a strong motivator, nonetheless. How much worse would these businesses be if there was no revenue driver?

The drive to "customer-value-first" business

Further, while we see many examples of businesses that are customer-hostile, our connected world is making it harder and harder for that to continue. We are moving to what I call the Relationship Economy, one that values Customer Lifetime Value and is becoming increasingly "customer-value-first," driven by "loyalty loops." Value-based pricing is increasingly recognized as best-practice in B2B, and it is bound to become more dominant in B2C as well.

Ownership of attention and data as labor

As Oremus points out, this criticism of the ad-model goes back to the TV era (not just to 1972, but to 1959, when Walter Lippman said of "free" TV, it is ultimately "the creature, the servant and indeed the prostitute of merchandising"). But, because the Internet is so personalized, it has taken a new and more ominous dimension. Personalized media exert precision power over our attention and data. Mass media "mind-control" was superficial -- easily recognized and counteracted. Manipulation and surveillance by precision media is insidiously more dangerous.

The "reverse meter" addresses this directly -- putting a value on user attention and data enables the user to judge and accept or reject the value proposition. That gives businesses a much stronger incentive to optimize data and attention for user value, and to be transparent about how that is done.  We are no longer "powerless pawns," and gain real leverage -- whether enabled voluntarily by the platforms or by mandated by the government.

This will not solve everything. Other action is needed -- by users, and probably by regulators. As Oremus says, we "have the power to demand change." A forced shift to user revenue is not the only way to demand change. But it is the simplest and fastest way to drive a fundamental shift toward better directions. Other actions by users and regulators can then complement that. But there is reason to doubt they can be effective without it.

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