Tuesday, August 13, 2024

"You are the Product" Works Because Users Get Value

It is commonplace these days for observers to note that if a user is not paying for a product, then the user is the product. Sometimes that is viewed as a bad thing, but there is a bargain being struck here: users get value in exchange for being subjected to advertising.


And that is a time-tested value proposition. Users and customers get free or reduced-cost products they value for less money than would otherwise be the case. 



Product

Form of Subsidy

Value for Users

Free Online Games

In-app purchases, advertisements

Free gameplay, access to new levels/characters

Free Mobile Apps

In-app purchases, advertisements

Free core functionality, additional features for purchase

Free Video Streaming Services

Subscription model, advertisements

Free access to content, ad-free viewing option

News Websites

Advertisements, paywalls

Free access to news content, in-depth articles for subscribers

Social Media Platforms

Advertisements, premium subscriptions

Free connection with others, enhanced features for paid users

Free Email Services

Advertisements, paid storage upgrades

Basic email functionality, additional storage and features for a fee

Open-Source Software

Donations, corporate sponsorships

Free access to software, potential for customization and improvement


In principle, other forms of subsidy, discounts or premium value also are common. 


Product

Value for Users

Wholesale Clubs (Costco, Sam's Club)

Bulk discounts on groceries and household goods

Streaming Services (Netflix Premium, Spotify Premium)

Ad-free viewing/listening, access to exclusive content

Gyms and Fitness Centers (Monthly Memberships)

Access to workout facilities, classes, and potentially personal training

Subscription Boxes (Beauty, Food, etc.)

Curated selection of products delivered regularly, often at a discount

Cloud Storage Services (Dropbox Plus, iCloud+)

Increased storage capacity for documents, photos, and other files

Software Subscriptions (Adobe Creative Suite, Microsoft 365)

Access to the latest software updates and features, often with cloud storage included


The point is that as much as some decry the use of advertising, sponsorships and memberships, these are simply ways of creating value for buyers, offering lower prices and discounts, free access or perceived higher value. 


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