Christopher S. Penn – Marketing AI Keynote Speaker

No such thing as a free lunch

—

by

Christopher S Penn
in
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BLTNo such thing as a free lunch

How much did you pay last year for Facebook? For Gmail? For Foursquare? For Twitter?

Right.

Nothing.

How much value did you derive from these services?

If you don’t know or can’t tell, the easiest way is to ask yourself how much you would have to spend out of pocket to recreate them. Take something like Gmail, as an example. You’d need a computer with an Internet connection, the Linux operating system, the Postfix mail server, the Apache web server, knowledge of how to securely configure all these pieces, and the web interface.

You’d need to administer this server, applying software updates and security patches on a frequent basis. It’s not an impossible task – I did it for years as an IT administrator – but it is not a simple thing to do, and it is not an inexpensive thing to do.

How much would it cost you to develop your own Facebook, where you could set your own privacy terms, run the service exactly the way you wanted it to, be everything that you wanted it to be?

Services like Twitter, Facebook, and Gmail are not free. They have never been free. Up until now, the costs to you have merely been deferred. They have real costs that are traded in exchange for something of value from you. In this day and age, that’s personal and behavioral data. Your goodwill? Your word of mouth? Both combined with $5 will get you a cup of coffee from the local commercial coffee chain. What’s for sale is you, the consumer, to advertisers and partners.

If you don’t like how these businesses – and they are businesses, seeking to make profits – treat you, don’t use them. Don’t sign up for them. Don’t give them your time, data, or mindshare. Build your own or use businesses that are more aligned with your values – and be prepared to pay cash out of pocket for them.

There is no such thing as a free lunch.

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Comments

26 responses to “No such thing as a free lunch”

  1. Debbie Ferm Avatar
    Debbie Ferm

    Oh, this is so, so true! I've been trying to teach my kids about “free”, and it's a hard concept for them to understand. I remember the econ class where I first really got it and I've never thought about things the same way since.

    Reply
  2. Debbie Ferm Avatar
    Debbie Ferm

    Oh, this is so, so true! I've been trying to teach my kids about “free”, and it's a hard concept for them to understand. I remember the econ class where I first really got it and I've never thought about things the same way since.

    Reply
  3. Matt Ridings - Techguerilla Avatar
    Matt Ridings – Techguerilla

    I have mixed feelings on this. On the one hand, you're absolutely right and I 100% agree with the notion that these are businesses out to make a profit.

    But I think were it goes astray is that given the current broohaha over Facebook I have to assume that all of that crowing is what precipitated this article. And when combined with that information it basically leaves your premise being “if you didn't pay anything, you cannot trust an organization to uphold the values it presents to you, nor should you be upset when it doesn't”. The problem isn't are you trading personal data in exchange for hard dollars, of course you are. The problem is whether you still have control over *what* data is being traded. If you want to look at this as only logic vs. ethics, values, emotions, etc. then the equation looks something like:

    Initial Data/Controls Agreed Upon By Consumer = x Value To Provider. That is presumably determined to be valuable enough to both parties to be an equal exchange. No problems so far.

    Provider changes the initial agreed upon terms midstream, but does so quietly and makes it more difficult for Consumer to override. Consumer discovers this. Consumer now angry because the original value proposition has gone out of balance in favor of Provider in a seemingly underhanded way. Seems like a logical response to me. “Free” is a misnomer. You have a real cost, it's just not a monetary one. Each piece of your data you release has a value, you trade upon that value. When more of those pieces are taken than you initially agreed upon, or more importantly, when it's done in such a way that you don't find out until *after* the fact, it feels like a bait and switch to the consumer. And in my opinion that's exactly what it was.

    You can argue to *leave* that company that abuses that, but to argue that you can't trust an organization in the first place whose biz model is based upon the trading of your information I have to disagree. It's those businesses that need the *most* trust. My information is not free, and it's not a minor offense for you to take it, expose it, and trade upon it without my permission.

    Reply
  4. Matt Ridings - Techguerilla Avatar
    Matt Ridings – Techguerilla

    I have mixed feelings on this. On the one hand, you're absolutely right and I 100% agree with the notion that these are businesses out to make a profit.

    But I think were it goes astray is that given the current broohaha over Facebook I have to assume that all of that crowing is what precipitated this article. And when combined with that information it basically leaves your premise being “if you didn't pay anything, you cannot trust an organization to uphold the values it presents to you, nor should you be upset when it doesn't”. The problem isn't are you trading personal data in exchange for hard dollars, of course you are. The problem is whether you still have control over *what* data is being traded. If you want to look at this as only logic vs. ethics, values, emotions, etc. then the equation looks something like:

    Initial Data/Controls Agreed Upon By Consumer = x Value To Provider. That is presumably determined to be valuable enough to both parties to be an equal exchange. No problems so far.

    Provider changes the initial agreed upon terms midstream, but does so quietly and makes it more difficult for Consumer to override. Consumer discovers this. Consumer now angry because the original value proposition has gone out of balance in favor of Provider in a seemingly underhanded way. Seems like a logical response to me. “Free” is a misnomer. You have a real cost, it's just not a monetary one. Each piece of your data you release has a value, you trade upon that value. When more of those pieces are taken than you initially agreed upon, or more importantly, when it's done in such a way that you don't find out until *after* the fact, it feels like a bait and switch to the consumer. And in my opinion that's exactly what it was.

    You can argue to *leave* that company that abuses that, but to argue that you can't trust an organization in the first place whose biz model is based upon the trading of your information I have to disagree. It's those businesses that need the *most* trust. My information is not free, and it's not a minor offense for you to take it, expose it, and trade upon it without my permission.

    Reply
  5. Christopher S. Penn Avatar
    Christopher S. Penn

    Value changes, absolutely, with these companies. And I think your last point is the important one – if it's of concern, leave. Vote with your feet and dollars, and the companies in question will either need to find a different revenue model or accept that their asset – the audience – is decaying faster than they can monetize it.

    Reply
  6. Christopher S. Penn Avatar
    Christopher S. Penn

    Value changes, absolutely, with these companies. And I think your last point is the important one – if it's of concern, leave. Vote with your feet and dollars, and the companies in question will either need to find a different revenue model or accept that their asset – the audience – is decaying faster than they can monetize it.

    Reply
  7. Chel Wolverton Avatar
    Chel Wolverton

    Same argument goes for events like Podcamp. I don't get paid to help organize but it still costs me time to organize it. If I didn't love doing so I wouldn't spend the time. Because a lot of folks don't see what putting together the event takes doesn't mean it's magic.

    The really interesting and sad part to me is the sense of entitlement that comes with some free events, services and items. Appreciate that you have access to the knowledge, information and services and move on.

    Reply
  8. Chel Wolverton Avatar
    Chel Wolverton

    Same argument goes for events like Podcamp. I don't get paid to help organize but it still costs me time to organize it. If I didn't love doing so I wouldn't spend the time. Because a lot of folks don't see what putting together the event takes doesn't mean it's magic.

    The really interesting and sad part to me is the sense of entitlement that comes with some free events, services and items. Appreciate that you have access to the knowledge, information and services and move on.

    Reply
  9. Debbie Ferm Avatar
    Debbie Ferm

    Oh, this is so, so true! I've been trying to teach my kids about “free”, and it's a hard concept for them to understand. I remember the econ class where I first really got it and I've never thought about things the same way since.

    Reply
  10. Matt Ridings - Techguerilla Avatar
    Matt Ridings – Techguerilla

    I have mixed feelings on this. On the one hand, you're absolutely right and I 100% agree with the notion that these are businesses out to make a profit.

    But I think were it goes astray is that given the current broohaha over Facebook I have to assume that all of that crowing is what precipitated this article. And when combined with that information it basically leaves your premise being “if you didn't pay anything, you cannot trust an organization to uphold the values it presents to you, nor should you be upset when it doesn't”. The problem isn't are you trading personal data in exchange for hard dollars, of course you are. The problem is whether you still have control over *what* data is being traded. If you want to look at this as only logic vs. ethics, values, emotions, etc. then the equation looks something like:

    Initial Data/Controls Agreed Upon By Consumer = x Value To Provider. That is presumably determined to be valuable enough to both parties to be an equal exchange. No problems so far.

    Provider changes the initial agreed upon terms midstream, but does so quietly and makes it more difficult for Consumer to override. Consumer discovers this. Consumer now angry because the original value proposition has gone out of balance in favor of Provider in a seemingly underhanded way. Seems like a logical response to me. “Free” is a misnomer. You have a real cost, it's just not a monetary one. Each piece of your data you release has a value, you trade upon that value. When more of those pieces are taken than you initially agreed upon, or more importantly, when it's done in such a way that you don't find out until *after* the fact, it feels like a bait and switch to the consumer. And in my opinion that's exactly what it was.

    You can argue to *leave* that company that abuses that, but to argue that you can't trust an organization in the first place whose biz model is based upon the trading of your information I have to disagree. It's those businesses that need the *most* trust. My information is not free, and it's not a minor offense for you to take it, expose it, and trade upon it without my permission.

    Reply
  11. Christopher S. Penn Avatar
    Christopher S. Penn

    Value changes, absolutely, with these companies. And I think your last point is the important one – if it's of concern, leave. Vote with your feet and dollars, and the companies in question will either need to find a different revenue model or accept that their asset – the audience – is decaying faster than they can monetize it.

    Reply
  12. Chel Wolverton Avatar
    Chel Wolverton

    Same argument goes for events like Podcamp. I don't get paid to help organize but it still costs me time to organize it. If I didn't love doing so I wouldn't spend the time. Because a lot of folks don't see what putting together the event takes doesn't mean it's magic.

    The really interesting and sad part to me is the sense of entitlement that comes with some free events, services and items. Appreciate that you have access to the knowledge, information and services and move on.

    Reply
  13. Mick Morris Avatar
    Mick Morris

    Hey Chris, this is an interesting way of looking at the value chain of social media. You are absolutely right there is no such thing as a fee lunch.

    However, there needs to a close examination of the more contractual nature of the exchange. This does not just apply to facebook etc…. when we agree to terms of service at the commencement of a relationship to have one party unilaterally change the conditions of that contract (as has facebook, as do telco's, as do banks etc etc etc) is fundamentally unfair, regardless of the fact that they are a business and are seeking to make a profit.

    If they are going to reserve the right to unilaterally change conditions then the onus should be on that business to provide detailed analysis of the changes and how they could possibly affect the consumer to EVERY customer well in advance of the change. Thus providing the consumer with adequate time to decide if they wish to buy in to the change or make some other decision about their participation.

    The fact that there is no such thing as a free lunch should cut in both directions!

    Reply
  14. jlbraaten Avatar
    jlbraaten

    This is a great reminder that while we don't always like the changes coming out of our favorite services, we're using them at no direct cost to us. Really, we don't have room to complain because there's always a choice.

    Reply
  15. jlbraaten Avatar
    jlbraaten

    This is a great reminder that while we don't always like the changes coming out of our favorite services, we're using them at no direct cost to us. Really, we don't have room to complain because there's always a choice.

    Reply
  16. tschnick Avatar
    tschnick

    Well said sir.

    Reply
  17. tschnick Avatar
    tschnick

    Well said sir.

    Reply
  18. Mick Morris Avatar
    Mick Morris

    Hey Chris, this is an interesting way of looking at the value chain of social media. You are absolutely right there is no such thing as a fee lunch.

    However, there needs to a close examination of the more contractual nature of the exchange. This does not just apply to facebook etc…. when we agree to terms of service at the commencement of a relationship to have one party unilaterally change the conditions of that contract (as has facebook, as do telco's, as do banks etc etc etc) is fundamentally unfair, regardless of the fact that they are a business and are seeking to make a profit.

    If they are going to reserve the right to unilaterally change conditions then the onus should be on that business to provide detailed analysis of the changes and how they could possibly affect the consumer to EVERY customer well in advance of the change. Thus providing the consumer with adequate time to decide if they wish to buy in to the change or make some other decision about their participation.

    The fact that there is no such thing as a free lunch should cut in both directions!

    Reply
  19. jlbraaten Avatar
    jlbraaten

    This is a great reminder that while we don't always like the changes coming out of our favorite services, we're using them at no direct cost to us. Really, we don't have room to complain because there's always a choice.

    Reply
  20. tschnick Avatar
    tschnick

    Well said sir.

    Reply
  21. Sean Avatar
    Sean

    I like your analogy to how complicated setting up your own gmail would be.
    People who think companies provide these services “free” out of the goodness of their own hearts are just being naive.

    Reply
  22. Sean Avatar
    Sean

    I like your analogy to how complicated setting up your own gmail would be.
    People who think companies provide these services “free” out of the goodness of their own hearts are just being naive.

    Reply
  23. Sean Avatar
    Sean

    I like your analogy to how complicated setting up your own gmail would be.
    People who think companies provide these services “free” out of the goodness of their own hearts are just being naive.

    Reply
  24. bogace Avatar
    bogace

    Well, you are right, for someone with enough technical knowledge, it's not hard to build your own mail system, or social network etc, if you are so careful on your privacy. Well, and about all those services you mentioned, yes, they are never free, because our data, time spent on them, they are all a values, and they can be bought and sold, also statistics…

    Reply
  25. bogace Avatar
    bogace

    Well, you are right, for someone with enough technical knowledge, it's not hard to build your own mail system, or social network etc, if you are so careful on your privacy. Well, and about all those services you mentioned, yes, they are never free, because our data, time spent on them, they are all a values, and they can be bought and sold, also statistics…

    Reply
  26. bogace Avatar
    bogace

    Well, you are right, for someone with enough technical knowledge, it's not hard to build your own mail system, or social network etc, if you are so careful on your privacy. Well, and about all those services you mentioned, yes, they are never free, because our data, time spent on them, they are all a values, and they can be bought and sold, also statistics…

    Reply

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