Tuesday, October 18, 2011

Facebook, Disney World, and the Golden Rule—When Businesses Have “Customers” Who Don’t Pay

Yes, yet another post occasioned by the upcoming Facebook changes. For a couple of others, see here and here. 

No, not my opinion on whether the changes are amazing or awful, useful or confusing, or smart or misguided. Rather, in my quest to understand what annoyances I’ll face over the next few weeks navigating the new layout, some observations about Facebook as a business—and its users as its customers. Or are we?

An interesting comment in “yet another post about the upcoming Facebook changes” caught my eye the other day“Remember that as long as you do not pay for Facebook, you are the product, not the customer. That's why when you complain, Mark Zuckerberg often ignores you.” This got me thinking. The first image that came to mind was of the vast world of Facebook users swimming around in a big fishbowl, with Facebook’s paying customers, businesses who want data, ominously staring in. An eerie picture, to say the least. But then I started realizing that this two-tiered-consumer business model doesn’t belong to Facebook alone. Rather, it applies to any business that separates consumers who want to use from consumers who are willing to pay.

Great example: Disney World. Last I checked, most normal 10-year-olds aren’t making a six-figure salary (that’s what you need for a trip to Disney World these days, isn’t it?). However, most normal 30-somethings also aren’t clamoring to meet someone dressed up as “Jasmine” and to ride “It’s a Small World After All” (okay, maybe some*). Somehow, though, Disney World rakes in billions of dollars a year. The kids want it, and the parents pay for it. 

This is really how Facebook works, isn’t it? Users want to be able to share their lives, and to share in the lives of their friends, via the Internet. But since they won’t (or at least don’t) pay for this capability, businesses step in, because Facebook has something they want. Of course, parents empty their wallets at Disney World out of a true desire for their children’s happiness and enjoyment (or a weakness for good advertising). Businesses pay for Facebook’s operating expenses because they want to exploit the information its users freely share. In either case, you can bet that everyone involved remembers the Golden Rule: whoever has the gold, rules.

Ultimately, though, these types of businesses can’t afford to ignore their “user” customers—despite the fact that these customers aren’t keeping the lights on, at least not directly. If kids aren’t excited to go to Disney World, most parents surely wouldn’t fork over the money for the trip (and if the kids come home unhappy, I’d be willing to bet there are some parents on the phone demanding a refund of the money they took out of retirement savings to make the excursion). The same holds true of Facebook. If its users are unhappy with their experience, and either begin sharing less, or—God forbid—leave the site all together, businesses won’t pay for the website’s continued existence.

It’s a weird, triangular relationship, but each party is indispensable. Ultimately, while I’m sure I’ll suck it up and get used to the new “Timeline” profile page Facebook is introducing, I hope Facebook—and any similarly-structured business—keeps in mind that if it wants to keep the parents happy, it’d better keep the kids happy, too. 

*Co-editor Dan Tenenbaum, though he has moved beyond the 30-something cohort, is a perfect example—Ed.

A Post by Karen Wenzel, Guest Blogger

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