Everything has a cost.
Most of us are ready to accept this in the physical world, but we tend to balk at paying for things online. So how does this work in the realm of technology and the ubiquitous “free” app offerings? For answers, we’ve turned to serial app entrepreneur Aidan Fitzpatrick, CEO of app and data company Reincubate.
As the founder of a company that builds products, it’s important to Aidan that he monetizes their own products sustainably, and without relying on capture of user data. Over the years, Aidan used a mixture of lifetime and subscription-based payments for products as the fairest and most transparent option. He addresses these decisions in earlier comments about why his company took that payment route.
For the impact on social media users and other app customers, here are his thoughts on the tension between the pricing and privacy of digital offerings:
Why We’re Reluctant to Pay
Aidan: This may be because of the intangible quality of apps and software: when something isn’t physically manufactured and distributed, it can be difficult to see why it should cost money. The issue may also lie in the history of open source apps and software: the beginning of the internet may have championed collaborative free tech, but what exists now is not free and, I would argue, is less than virtuous.
Nothing is Free
Aidan: Think of the app or software you use most often. Your search engine? Maybe it’s your email, your messaging app, social media, or a news app. It’s probably been impeccably designed, with a lot of thought put into how you use it, and what you use it for. It may even notify you throughout the day to remind you to use it.
And it’s most likely free to use. But these chirpy, user-friendly, “free” products aren’t free to make, and it’s naive to think that these “friendly” companies (Google, Facebook, etc) are providing a free service to users—at no small cost to themselves—without financial incentives to do so.
Of course they’re not. If it’s free: you’re the product.
Combining addictive design with targeted ads is a highly profitable design model. “Free” apps generally rely on high user engagement and notification bombing to ensure you’re spending as much time looking at their apps (and ads) as possible.
If you have an iPhone, you might have been unpleasantly surprised with your Screen Time report. You might also have found that you’re spending the most time on apps that you haven’t ostensibly spent any money on.
When You’re the Product
Aidan: This is not good for us, for a number of reasons. Aside from addictive designs that encourage procrastination and discourage productivity, the cost we pay for using “free” apps is our data. At the very least, that can be fairly benign and can even feel helpful: bots that track our searches and our clicks can then show us ads targeted to our unique interests, for example.
One way “free” apps make money is when we click through on those ads. But another way “free” apps make money is by selling our data. As users, it can be very difficult to find out exactly what pieces of our data are being sold.
Our information is remarkably valuable to big companies. Unfortunately, it’s not all that financially valuable to us. Data isn’t the new oil; it’s more like sand. While our individual data may not be able to bring in much money, big companies with tens of millions of daily users capture data by the terabyte and use it to target content and advertising to us, which is a much better business model.
Policy Lagging Behind Awareness
Aidan: But whether or not we can make money from our data, it’s in our interests to protect it. Consumers are becoming increasingly aware that their data is being analysed by big, free-to-use software companies, and our data is used to manipulate us and drive us to spend more time on our apps.
An estimated 100 million people watched Netflix’s The Social Dilemma, and last year both American and European legislators started to take aim at large software companies on these grounds. Slowly, policies are changing to protect users. Legislation has emerged in Europe and California in the form of (General Data Protection Regulation (GDPR) and California Consumer Privacy Act (CCPA) over recent years, and policy from some tech companies is building on this. Earlier this year, Apple launched their “app privacy labels” to make it clear to end-users how their data is used.
These policy changes are unlikely to be bolstered or rigorously enforced any time soon, however, and as Apple and Facebook publicly battle over user privacy, it’s clear that a lot is being spent on capturing public support.
User Beware
Aidan: To avoid being monitored and manipulated, we need to look keenly at the software we’re choosing to use. Once you know what you’re looking for, it’s not too hard to safeguard your privacy.
Look at the way the company makes money. If it’s not clear how an established app makes money, you can cautiously assume that there’s a reason they don’t want you to know. And then you can decide: is it worth it to continue using an app that may be selling my user data?
Paid apps (especially subscription-based apps), have a transparent mechanism for making money; there’s no ambiguity as to how they’re planning to continue to pay employees and operating costs. Paid email services such as HEY! can protect your privacy for you by blocking spy trackers from accessing detailed read receipts (including your location and device).
Free Versus Paid Dilemma for Developers
Aidan: To put it briefly: it takes a huge number of hours and investment to create a product that works extremely well. For the products being created, these costs are ongoing, because they need to continue to be modified and updated to ensure they continue to work.
That’s not unusual with software; an app usually isn’t a “build it once and it’s done” thing. Reincubate, as do other companies, offer limited free versions of our products. However, the only way the company is able to provide a truly free version without the “admission price” of ad-spamming or selling information is with a paid option that offers more. This model also allows for a better version of the free offering in terms of ad-free experiences, better design and service support.
What’s Your Privacy Worth to You?
Aidan: Privacy on the internet and on your computers and devices might be a luxury. Those who want it may need to accept that they have to pay for it.
Alongside the enduring notion that we have of our right to free technology, there’s also a vague idea that technology should be good. It should be virtuous. We should be able to trust it. But a virtuous company can’t sustain itself without funding, and ultimately that funding should come from its customers rather than a less transparent source like the sale of user data. (Some companies take external funding from investors whilst they work to build up the number of customers they have, but they’re still working towards this goal.)
The only way for companies to act virtuously is with transparency around how their business is sustained. Perhaps the most effective way to protect our privacy is to spend a little more on the software we use.
About the Expert
Aidan Fitzpatrick founded Reincubate in 2008 after building the world’s first tool for iOS data recovery, enabling users to securely manage their data while growing a values-led enterprise committed to integrity, thoughtfulness, and innovation. His work has been cited in multiple research projects and his technology innovation has twice been honoured by the Queen of England.
