The Right to Pay for my Products
Should we forbid personalised advertisement to gain back our attention, our data, our digital selves? Should we completely break the underlying economic machinery that fuels companies like Facebook, Twitter, and Google? I think the answer to that has to be No.
Every now and then I have conversations or read comments about the negative impact of these companies on society. Their business model seems to be diametrical opposite to what we as individuals want. We want to stay in contact, find new friends or jobs, find the right answer to our questions. But they require us to hand over our personal life, be as much engaged with their platforms as possible, and to spent every waking minute acting, reacting, and being influenced. At least to me that doesn’t sound like a preferable nor even acceptable deal. But why is it, that we have this relationship? The answer probably is: “So we become more valuable to their actual users”: Other businesses and as it allegedly seems states. They are paying the bills, they are the ones who drive revenue. The more attention we focus on their products, the longer and more often we can be convinced to buy, vote, or behave. The more data is available about each one of us the better this influence is exercised, because it can be personalized.
But a growing tension between users and platforms seems to be an indicator that we don’t want our attention and data captured. We don’t want to be treated like the product and give a few entities the key to our personality. And I agree. But I disagree when it comes to some of the proposed solutions. Making their business model - personalized advertisement - illegal being one of the more prominent ideas. Or complete disallowing them to collect any data, which results in the same outcome. But to me proponents of these ideas disregard the value of the products too easily. Do you want to life without Google Search or the option to stay in contact with a remote friend through Facebook? I believe these products carry a lot of actual value, but we as users have an asymmetric relationship with them. We are not allowed to become the actual, paying customers. We can use their products without paying money, but we pay the price by being the product.
But why is that? Companies like Google and Facebook are brokerage platforms for attention. That is their main business model. Our attention is offered and someone else is buying it. But for some reason we ourselves cannot be that buyer and these companies don’t show any activity in rectifying our relationship. It seems we, as users of these products, have to claim the right to buy back our attention.
But how would such a right look like?
A Draft: The Right to Pay
- Companies that sell data and attention of their users have to provide these users with an option to buy it back in the form of a payed contract that disallows the sale of personalised data and prohibits the inclusion of it in the data and attention bidding process to third parties. It basically reserves the right that users can buy back their digital profiles before it reaches the market.
- The contract also disables notifications and data collection about the user during the use of the product, but it can be enabled by user consent. Access to the product cannot be denied when no consent is given.
- Prices for such user contracts and the right to pay for a service is determined by the prices payed on the brokerage platform run by the company. A distinction can be made between different countries and an update needs to be done periodically, e.g. every year.
The whole story
Instead of keeping the brokerage side of their business, the core of their business model, closed to a few large buyers it has to be opened up to all their users. They have to provide users with a contract to pay for the services and products they use. At the same time that contract disallows the sale of personalised data and prohibits the inclusion of that person in any attention bidding process. Notifying users and collecting data on them is allowed but disabled by default. A user may still enable it to allow features like personalized recommendation or search to work properly, but it is opt-in. Denial of service when no consent is given is illegal.
That is the basic structure and idea behind a possible legislation that creates a right for us to not be the product. But of course it immediately creates a loophole: Such a contract can be made impractically expensive. Imagine you have to pay 100 USD a month to use Instagram. It is unlikely that anyone will subscribe to such a plan, especially when they can have it virtually for free. But what if that contract doesn’t state a specific price but allows users to bid for his or her own data and attention? Now the price that is being paid correlates to the actual market price of how much my digital me is worth. I can buy myself at market price.
What such a contract looks like in reality is of course unclear. There are many possible ways to construct it. Two potentially interesting ones are the following:
The technically most complex and involved solution would require each user to actually partake in each auctions on him or her, define maximum bid limits and the like. It also requires a brokerage firm like Facebook to handle a significantly larger amount of participants in its trading system. Before it was a limited number of entities interested in such a purchase. Now the number potentially growths to millions of participants in the case of large social networks like Facebook or Instagram. Or billions if this legislation would be applied in most markets.
A more practical solution is to calculate average yearly attention and data brokerage revenue generated per user in a specific region like a country. I presume they are producing comparable statistics already to gauge their business development and therefore having these numbers should come at a low cost. The cost for a user contract then is such a number. Let us assume Instagram in 2020 earned 20 USD per user per year in the US on average. In that case the right for a US user to buy back his or her attention and data is 20 USD for the next year 2021.
I personally think that a version of the latter is the way forward. It is simple for both the companies and users to enact, while still being close to the underlying idea of giving the user access to the brokerage system.
So far so good, but looking closely at the concept we should immediately see another problem: The future development of user data and attention prices after the right is implemented has the potential to break companies like Google or Facebook and our access to their products.
The impact of future data and attention prices on companies’ survival
Obviously there are three ways where the price can go in the long run: up, down, or nowhere, meaning it stays the same. We actually don’t have to predict what will possibly happen to each and every company. Next to being impossible it isn’t required in the first place. We only have to make sure that no matter where these prices go that:
- Brokerage companies do not end up in a trap created by such a contract so that they will die out eventually.
- User contract prices reach a level which is uneconomical for most individuals and therefore users are forced to accept that their data and attention is sold.
Prices go up
There can be many different reasons why that happens. Maybe the increased competition on the bidder side also increases the prices. There is less to buy but more demand. In the end, we don’t have to know the exact reason for the increase. We have to understand what the implications are on brokerage companies and users. For brokers it means increased revenue, because bid prices went up and they get a share of it. Users on the other hand have to pay more because their contracts are directly connected to bid prices. All in all revenues and profits of brokerage companies should develop with the price.
But what happens when the user contract prices reach a level where they become uneconomical. What consequence has that in the long run? People start to cancel their payed accounts with services like Instagram and switch to the user-as-a-product model, which cost them no money. But that means a decreasing number of user contracts, less competition, and probably a going back to the current status quo. At some point the user contract becomes attractive again. We would see a cyclic pattern of price swings coupled with users signing payed contracts and then leaving them again. Potentially a stable prices level would establish itself.
On the other hand, if prices are high based on independent reason the question can be stated: But for how long can that be? To pay significantly more means companies buying data and attention have to spend significantly more. They have to finance it from their revenue. To justify paying more their revenue has to increase, they have to reduce their profits, or run on debt. But as far as I can see it that should not lead to a relative long term price increase for user contract, relative to a user’s income, because it seems like an inflationary process to me.
Prices go down
Again we can have many possible scenarios leading to this price development. The most obvious one is a behaviour we see during the early development of social networks: The value of its user’s data and attention growths with the size of the network. You can reach more people and by sheer size increase the chance to reach more of the right people. But decreasing the pool of possible users you can bid on we reverse the economic machinery behind such social networks. The more people buy their data and attention back the smaller the network seems to buyers and therefore holds less value.
Here, the situation is reversed compared to rising prices. Users experience cheaper and cheaper user contracts, which might even attract more to switch, accelerating the process. On the other hand, for the brokerage company we have to paint a dire picture. Its revenues are declining and so are its profits and because of this right it cannot escape. But I think such companies can counteract such a development by closing down their brokerage business and zeroing down on user payed contracts. In that case this legislation wouldn’t affect them anymore and they are able to negotiate contract prices with their customers as required. And in a situation of a dying brokerage business but flourishing direct user payments I don’t see why that isn’t an acceptable way out.
Prices stay the same
This one is rather uninteresting. If prices stay relatively stable the system itself is stable. Brokerage companies continue to generate revenue from the sale of user data and attention, while a section of users executes their right.
But what about third party companies and industries that are based on us as data?
Of course the direct user data and attention brokerage companies like Facebook, Google, and the like are not the only ones making their money from us. There are probably whole industries centred around that concept. That can be secondary brokerage firms that buy data from companies like Facebook and resell it in the same or a repackage form. Or it is the plethora of “influencers” buying reach or social media marketers that run their business on our attention. I think this specific question isn’t one which has a satisfactory economic answer, nor do I think it should be asked in that way. I think the right question is: Do we want these businesses, which run on attention without being a product to the users whose attention they buy? Do we as users actually value them, or are they the side effect of the actual product we want: A social network or a quality search engine?
Final remarks: Will this right or any version of it solve all the problem we experience with current user attention based industries?
No. And I believe no single legislation can. It is a many facetted problem which needs solutions on different levels. To be able to get your data and attention back is just one area. Another one is to educate people about the business model of these companies. They have to understand why they are seeing what they are seeing. And there will be many more issues we have to face. How do we handle state actors influencing social networks? Is anonymity of users always the right thing? And many more. But I have the feeling that we have to start somewhere, that we have to make a first step.