Online business models: value vs. values

I read a few years ago that ‘free’ had overtaken ‘sex’ as the most searched-for term on the web. I don’t know how much truth there was in the story, but it’s certainly true  the prevailing view is that stuff online should be free – an attitude which has found its way into the very core of some of the world’s biggest businesses.

Of course, there’s no such thing as a free ride. While we’re not digging into our wallets, the free services we use are digging into our online lives, farming and selling as much intelligence about us as they can. Google knows what we search for, what we say to each other in email, and how we use the zillions of websites who’ve plugged in Analytics. Their value is in that vast knowledge and their revenue in its sale to advertisers – the deeper the data, the more surgical the marketing strike and the higher the premium. Facebook’s based on the same principle; the more we tell our friends about ourselves, the more Facebook knows about our preferences, and the higher its share price becomes.

It’s an attractive model because ‘free’ is such a good way to grow quickly, but it inevitably creates a chasm between the value of the platform and the values of its audience. The only way to capture monetary value in this model is to erode the personal and private, especially as we’ve begun to share increasingly intimate pieces of our lives online. Once that model’s instilled, new features only have value if they increase or improve the data being captured – appeal to the user is only considered to ensure the feature is used, thus providing the extra data.

It’s like being offered a free car on the condition every journey you make is tracked, every piece of shopping carried in it logged, all your passengers’ details noted, every phone call made from it taped, and that data being sold to the highest bidder so they can sell things back to you. Would you take the car? I’m sure many would, but I think most would consider the intrusion too great.

Surprisingly, successful business models did exist before the web, and I believe they’re perfectly transferable. There’s nothing wrong with building an appealing brand which provides great services and expecting people to pay to use them.

It’s exactly the approach we’ve taken with Blipfoto, because the integrity which underpins our offering is central to the values – and value – of the brand. And that includes respecting its users’ privacy. As well as providing the service, we’re some of the platform’s most avid users and it seems stupid to manage it in anything other than a way which provides the best experience to its users.

We’re not alone in this approach. The most obvious example I can think of is Vimeo, who’ve firmly established themselves as the best place to share original moving image content online. There are many other places to post your videos, but the folks at Vimeo have built something focussed on the user, not advertisers. That’s why users (me included) happily become customers – at a price of $60 a year.

Where personal content sharing and social networking are concerned, my money’s on this approach giving greater value and stability in the long run. Unlike a business whose customers are advertisers and users its commodity, it forges a deeper relationship which really can be based on openness, trust and integrity.

It’s still early days even for the Googles of this world, but it’ll be interesting to see how these two approaches pan out – particularly for those being forced into moving real-world business models, value and values online. The biggest challenge is possibly faced by newspapers, who’ve always had to tread a fine line between the integrity of the brand and the value of their readership to advertisers, but will increasingly struggle to draw income from both ends.

As ever, with challenges come huge opportunities for those who get it right. I’m sure the winners will be those who don’t throw the baby out with the bathwater and remember that despite all the layers of new-fangled wizardry, people are still people, good service is still good service, and customers are still customers.