Online advertising is the lifeblood of today’s digital economy, generating billions of dollars of revenue for ad-supported businesses—$88 billion in 2017 alone—as companies try to capture and monopolize consumer attention. With the currency being attention and data rather than dollars and cents, this surveillance capitalism extracts a huge cost on individuals.
This year has been riddled with a slew of data scandals that have consumers worried about the ways in which companies collect and store their personal data. Not only do consumers want to trust the companies they share personal data with, but they also want to feel confident that the company won’t go selling their information to unknown third-parties. As a result, there is an increasing demand for privacy-friendly business models where transactions are straightforward, with the costs clearly communicated.
This increased demand for privacy parallels another market trend: the rise of subscriptions. In the past five years, the subscription market has grown massively, exploding from $57 million in revenue in 2011 to $2.6 billion in 2016 in e-commerce alone. Netflix, one of the so-called FANG stocks, is Exhibit A that subscription businesses can earn massive revenue.
Considering consumer demand for both privacy and subscription services, it’s time for the top tech companies of the world to deliver on it.
Privacy in action
To explore the potential of subscriptions built on the principle of consumer privacy, let’s consider an alternate universe where Facebook offered a paid product.
To capitalize on this moment, Facebook could offer a premium version of its platform that is completely ad- and tracker-free and market it as the world’s first widely used, privacy-friendly social network. With an $8 to $10 monthly subscription, “Facebook Premium” could help the company attract a privacy-conscious audience that is increasingly less engaged with its platform, and potentially generate the same amount of revenue as it does from advertising in the U.S. and Canada.
As a paid product with no ads, Facebook Premium would no longer have the impetus to monopolize user attention to maximize ad impressions, nor would it need to harvest data to maximize conversion rates. Instead, it could deliver utility and value to its users as justification for the subscription cost. To entice users to subscribe, it could offer additional features for its messaging app, premium content for video, a curated (and finite) social experience that replaces its bottomless newsfeed, and other product innovations that focus on useful and personalized features rather than user engagement.
While privacy-friendly subscription services could open new market opportunities for Facebook, it isn’t the only company that could benefit from this new model. There are several tech giants that could benefit in similar ways.
For example, Google and Amazon already offer paid subscriptions. Google, which has more trackers across the web than any other company, according to a study done by our researchers, already charges users for increased storage on Google One. Google could build on this subscription structure to offer private versions of Gmail, Google Maps, and other services for a nominal fee.
Similarly, Amazon already offers Prime, its wildly successful subscription service with over 100 million members worldwide in 2018. Though Amazon is seeing impressive growth in digital advertising, pulling in $4 billion in revenue last year, it’s still dwarfed by the other ad giants—Google raked in a whopping $95 billion, and Facebook generated almost $40 billion. Rather than fight that uphill battle, Amazon could enhance its Prime membership with a new tier that grants users unprecedented privacy in e-commerce shopping.
In this way, both companies could essentially put a price on privacy, and let its users choose whether they want to pay for their technologies with money—or with data.
The bigger picture: data ownership
A critical foundation of privacy-friendly subscription services would be a data hub where users can see—and have an active role in choosing—what data these companies have related to them. More importantly, if and when a user wants to, they could completely delete, edit, or export their data. In this way, users’ privacy and control over their social and digital footprint could be turned into a product that is packaged and sold as a paid user experience. Not only would this approach offer tremendous consumer value, but it would also inoculate these businesses against aggressive privacy regulation like the General Data Protection Regulation (GDPR).
In a world where big tech is facing harsh criticism, this privacy as a paid service business model would pave the way for a mutually beneficial relationship between users and businesses. Netflix and other subscription companies have already created the basis for a subscription-based future, and now it’s up to the leading tech organizations of the world to put privacy at the forefront of their business.
Jeremy Tillman is the director of product at Ghostery.
