Manipulate Machines, Not People
johnstanderfer.comI think this is an inherent side effect of advertising-based revenue models. As they say "if you're not paying for it, you're the product being sold".
If you sell something for money, there's a single moment where your interests diverge from your customers -- when you accept payment. But the rest of you customer interactions are all about adding value.
I think you hit the nail on the head. But it does restrict the ambit of the possible for web properties to ones where the end-user both understands the value and is willing to pay the cost of the service being provided. It would be impossible to build facebook or google without an advertising based business model, you just can't reach critical mass.
That's because the interactive web inherently locks away software more than binary-only releases ever did. It certainly enables some new capabilities - google search is probably impossible to do in a distributed fashion. But things like facebook and twitter are just capturing the critical mass from what could be a decentralized platform and selling user-undesirable modifications. A company using technology doesn't necessarily imply a tech company.
" It would be impossible to build facebook or google without an advertising based business model,"
really? just like that . . . why give up so easily? let's throw some intelligence at the problem instead of just assuming it's not possible.
Recognizing the harsh practical reality is not "giving up"; if you're acting under the constraint that the end user of a web service must also be the customer, then you cannot under any circumstances get people to pay the actual costs per/customer of building something like Facebook or Google. There are other businesses that you could build at that scale that do fit under that constraint, but not web services that depend on millions of simultaneous users to produce any value at all.
The best estimates I have for what it costs google to provide service to one customer for 1/year is $20 < n < $24 and Facebook is probably more, can you name even one person of your acquaintance who would pay even $12/year for either of those services...? Even if hardly anyone else was using them? Before they were big?
So yeah, impossible, at least in the given constraints; like asking for a 50 seat airplane that's self-piloted, safer than current small planes AND costs less than $500 to build.
You might argue about my definition of impossible, but this isn't reddit, and I hope you recognize and understand that difference.
According to Facebook's S1 filings, their expenses correspond to roughly $1 per user per year, and their revenue is $4 per user per year.
I would pay > $4 per year if it meant I controlled my Facebook data (i.e., I was the customer, not the product).
I would absolutely be willing to pay $24 a year for what Google offers for free if the alternatives were what existed before those services got big (i.e. altavista and hotmail). Search and spam were both huge time-sinks.
We might be more focused on getting people to do things, but it doesn't need to be just about getting people to sign up for things. We can also use software to make people behave better, to make people's lives better.
Just yesterday there was a post from Grouper talking about how they figured out basically a hack to get people not to flake out (http://blog.joingrouper.com/intro-to-social-hacking-how-we-l...). Anil Dash talks about using technology to create more civil conversations on the web (http://dashes.com/anil/2011/07/if-your-websites-full-of-assh...). If you ask me, those are good developments and we should focus more on figuring out how to create online communities that are best. That may involve some manipulation but it may all be for the best.
> We can also use software to make people behave better, to make people's lives better.
Progressive (US car insurance company) gave my girlfriend this device that she plugs into her car's diagnostic port. The incentive is that if an insured driver agrees to use the thing and wants to "prove" they are a good driver. In return the user gets an insurance discount if their driving stats are good.
The little object does something very basic: It counts the number of "hard stops" in every trip and uses cellphone networks to report the data. People can then go look up the stats online. 2 hard stops for this trip, 7 for this trip, etc.
Eventually it turns into a sort of game to eliminate the hard stops from your driving routine. You pay more attention to driving because of it and therefore become a more attentive driver.
At the end of 6 months you send the device back and your insurance is adjusted (or not).
This is a huge win-win for software making people behave better:
1. Girlfriend gets a lower insurance rate
2. Progressive has evidence she is not an insane driver
3. Most interestingly, the device has forced her to be (seemingly) permanently more conscious about her driving and has made her a better driver. Not only does the device find bad drivers, but it can convince many to become better drivers, possibly without them even knowing it!
Literally software has consciously and unconsciously made her into a better driver and literally every party involved (her, progressive, people near her on the road) are better off for her having used this device.
Yes, yes the potentials here are limitless! Only downside: Less privacy and freedom.
At the moment it might be a nice discount for those who choose to volunteer. Its easy to see a future where it will be impossible to get affordable insurance if you opt out.
Now exchange car insurance with health insurance. My health habits are probably better than average. I do plenty of sports, no overweight, no smoking, not a heavy drinker etc.. In order to get an appropriate discount I would have to record my whole life.
I agree with author whole-heatedly that the software-development industry has shifted from manipulating machines to manipulating people. Writing software today is more about the content that the software provides than about figuring out how to make that actual software work.
Any modern web-based business must think of themselves as a media company. The software designers must ask themselves not how can I make something happen, but what content should I deliver to my users. There has been a paradigm shift in the industry. The code and how it works is irrelevant, and what matters most is the media that your service offers.
The author seems to wish that this weren't so, but unfortunately it is. I wish it weren't so, but it is. There does not seem to be any way around the issue.
"There does not seem to be any way around the issue."
Do something different. Write software that solves real problems and give it away. Fund yourself by coding for companies that solve real problems.
This isn't complicated.
The outstanding problems in computer science don't seem to require ingenuity in how the code is written. Rather, solving these new problems requires ingenuity in how the problems are approached and in how the algorithms are designed. For example, I was shocked to learn that on my campus, some of the coolest work in A.I. (machine learning, or whatever you want to call it) was being done by statisticians, not computer programmers.
Why do you have to give it away? Does a web-based tool like Jira not count as a way of solving problems for people and making money at the same time?
I don't agree that all web-based businesses are media companies. It's possible to do real work and solve problems on the web and have nothing to do with "media" or advertising or social anything.
What are the top websites today? Facebook, Google, Youtube, Wikipedia, ect. What are examples of the up and coming websites? Pininterest? Reddit?
All of these websites are media based. These websites focus on the content that they provide. None of these services, with the exception of perhaps Google, really care about software development. All of them care about their sites content.
Because all of these websites are media based, their business models revolve around ads and click counts.
The problem with the web-based tools is that, by necessity, you end up needing to find a way to monetize your userbase. And that means ads, and selling private information, and selling trends, and doing all of these heinous things.
Giving away the tools lets the users help themselves, and frees you of the burden of having to keep the service alive and monetize users.
1) Why is manipulating people inherently bad? The author simply throws:
> "The downside to this model is it that the company’s and user’s interests can never be aligned because the user is not the one paying for the product."
But he doesn't expand on it. To get users you still need a good product even if it's free or users would use something else. Part of the lessons behind increasing click through rates is to build a desirable user experience. The users are not wiring you money directly, but they're still worth money indirectly. Just saying "every free product must be bad for the consumer" sounds like a simplistic over-generalization.
2) How is every business not manipulating people instead of just machines? There isn't a black or white here. You don't manipulate machines simply out of love to build a genius technological innovation. You do it to manipulate people. Each piece of hardware or line of code is put in place trying to solve the same questions the author poses for manipulating people. Which GPU I need for users to buy games? Which algorithm gives better recommendations that the user will actually click on? Businesses manipulate machines while manipulating people. Only hobbyists do otherwise.
3) Is he using Apple as an example of a company who favors manipulating machines over people? Apple are the most extreme example of the contrary. They're genius at manipulating people. Many here will point out their technology are just small evolution over what existed before. But it's their genius marketing, branding and expert people manipulation skills that convince users their products are status symbols worth of their loyalty. And there's nothing wrong with these. Every business wish they had the people expertise that Apple does. That's what make businesses work. It's genius people skills that brings genius machine skills into user's hands.
Advertising is all about manipulating people. Furthermore successful advertising is all about making the perceived voluntary cost to the user smaller than the perceived value to the advertiser. If you took Facebook's revenue and divided it by the number of users, I'm guessing they would lose a lot of customers by charging that amount as a subscription fee.
If you don't advertise, you need to charge money.
If you charge money, and a competitor launches with successful advertising, then you will go out of business since the perceived cost for their users is lower than what you need to charge to stay in business.
"I wonder what a company like Facebook could build if it could treat its users as customers instead of products."
Not exactly sure that treating users as customers is better by much than treating them as products. How about treating users as users and let it flow from there?
how about treating users as people, because they are.
I was expecting an article on management styles. I left a firm after it was taken over by people who wanted absolute control of behavior. This was attained through Bolshevist Change Management meetings and mandatory ITIL course attendance. ITIL, for those who don't know, is the Information Technocracy Indoctrination Library, a collection of smug, manipulative, platitudinous and mind-numbingly boring volumes that serve as an outlet for the frustrated British Colonialist impulse, and all this implies (think Parkinson's law).