You love the place where everybody knows your name

When you are drinking at a bar or eating in a restaurant, what’s great service? What makes you loyal to a particular place? Is it not when they know who you are, what you like, and can therefore provide a level of service and intimacy that other places can’t match?

Why then is online, targeted advertising so different? Why do people get up-in-arms about companies getting to know you better, so they can show you ads you might actually like more?

That is probably what Mark Zuckerberg is thinking when he reacted to a comment Tim Cook once made:

When an online service is free, you’re not the customer. You’re the product.

And then Mark Zuckerberg in a recent Time Magazine article:

“A frustration I have,” Zuckerberg says, before a PR handler can change the subject, “is that a lot of people increasingly seem to equate an advertising business model with somehow being out of alignment with your customers. I think it’s the most ridiculous concept. What, you think because you’re paying Apple that you’re somehow in alignment with them? If you were in alignment with them, then they’d make their products a lot cheaper!”

I have to side with Zuckerberg here.

While many enthusiastically pay premium for Apple products, it’s true that Apple makes hand-over-fist profits. Apple can easily increase customer happiness by lowering prices (and still make a ton of money). Like any other company, Apple makes decisions not based on customer happiness, but on a combination of things — customer happiness, product quality and price — that maximize profits.

You can even argue that advertising aligns companies’ interests better with customers. Apple makes money when you purchase an iPod, whether you use it or not. Facebook, on the other hand, only makes money when you continue to use its products. So you could argue Facebook has a greater incentive to keep improving their products while Apple has a greater incentive to merely market them well.

I’m not actually arguing that advertising is a better way of making money than charging upfront prices. But it is a valid way of making money, and it’s not necessarily anti-consumer.

4 thoughts on “You love the place where everybody knows your name

  1. I think people just have an issue when companies have too much information about them. It’s a privacy thing. And companies like Google and Facebook try to mine this as much as possible to target advertisements towards the customers. To be fair, companies like Google and Facebook do provide their service for free.

    Honestly, I’m more on Apple’s side here. At the end of the day I trust them over Google or Facebook because I know data mining isn’t their main business model. But at the same time, I wouldn’t necesarily say that the other business model isn’t valid but I wouldn’t say it’s free either. It’s just that you giving up privacy is literally the price you’re paying.

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    1. It may also be an issue of people coming to terms with what privacy means online. After all, we have no issues with the bartender knowing our name, what drinks we like, what problems we’re facing in some cases, and so on. I suppose there’s something different about a face-to-face interaction vs. a digital one.

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  2. So Facebook is trustworthy because Apple is just as untrustworthy? Seems like there may be a logical problem here. Among companies that are scavenging your online information to exploit it for profit, yes, they may be on equal territory. But the correct response, if we agree with Zuckerberg, is to trust Apple less, not Facebook more. Long live Ello.

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