7 ms·

Why You Should Want to Pay for Software, Instagram Edition

67 points by speednoise 14y ago

zalew 14y ago
"X has Y millions of users, if they charged $5..." yeah, right. I am willing to pay for online services, but sharing phone pictures of coffee mugs or posting status messages isn't one of them. I bet most people feel the same.
jacktoole1 14y ago
While I agree with the overall sentiment of the article, the hypothetical monetization numbers in the last paragraph are just ridiculous. Getting 20% of a free userbase to pay anything is extremely high. ~0.2% to 2% sounds like a more likely number, based on my admittedly cursory knowledge of monetization of apps. $5 a month also sounds a bit high for essentially a photo-sharing service, a yearly charge of ~$20 sounds more likely. However, for users that have passed the "willing to pay anything" barrier, the actual cost might not as big a deal. This also completely ignores the viral nature of these types of services; people are more likely to use Instagram when their friends are using it. Without being free, it's not clear whether it would have taken off enough to gain 2 million users (or whether it could keep 2 million after the remaining 98 million left). That said, I'm all for paying for services, and much prefer that model to ads. But just because some of us would prefer that doesn't mean it would have been the right choice for Instagram. It's easy to look back and say "they should have charged users," but we can't be sure we'd be in a place to analyze them if they had.
- SoftwareMaven 14y ago
  I completely agree. But it would sure be nice if there was an option that said "Terms of Service A is free; Terms of Service B is $X/month". Then I could make the decision about whether the service/privacy/cost tradeoff is important enough for me to shell out either cash or privacy. This is especially true at points like this, when a service is trying to "go to the next level" in terms of revenue. Use the free stuff to get people hooked, then let people decide how to pay for their habit. If you can make $25/year off of me through my private info, let me decide if I want to pay $25/year for your service (which is, quite literally, pocket change). As it is, I'll just stop using your service (like I'm going to stop using Instagram).
sounds 14y ago
The Atlantic is being deliberately misleading here. Pay for Software? I think they should have said, "Why You Should Pay for Internet Service." That is, unless there's a way for you to download Instagram's entire service as a package and install it on your own infrastructure (not likely), you aren't ever going to pay them for "software." If you pay them, it will be a subscription to their service. I think the real culprit here is actually Google, who can (and do!) release all kinds of useful free services. They then actively support the misconception that all online services should be free – this helps them because consumers then make the error of assuming that this is reasonable; meanwhile, Google benefits as consumers turn a blind eye to their data mining, advertising, etc. I suppose it would be fair to blame all the large cloud providers competing in the same space (Microsoft and Yahoo for example). However, Google was the first to try this and arguably the most successful.
- rgbrenner 14y ago
  Google was not even close to being the first to give away services. Hotmail and Yahoo mail were around before Google even existed. And that's just the first two that came to mind.
  - sounds 14y ago
    That's not what I said, of course. Google doesn't just "give away services:" They release all kinds of useful free services. They then actively support the misconception that all online services should be free – this helps them because consumers then make the error of assuming that this is reasonable; meanwhile, Google benefits as consumers turn a blind eye to their data mining, advertising, etc. In other words, Google was the first to really push what could be done in free services. Sure, HTTP was a "free service" before Google ever existed – but that's not my point. Search engines existed before, but Google took a first step by placing the search results first – instead of the flashing banner ads.
    - rgbrenner 14y ago
      I remember the 90s before Google existed. There were search engines without ads. Search engines added ads after gaining an audience, just like Google did. Text ads were invented by Overture, another search company, before Google existed.
bksenior 14y ago
This make a wildly naive assumption that paying for a product somehow makes it less likely that they will monetize your likeness. The truth is large companies with any swath of investors are expected to grow, thats how money is made. This means that there will need to be constant new revenue streams added on. TLDR: Paying for any app just delays the inevitable monetization of content as the company is forced to expand and create more revenue.
- Steko 14y ago
  Agreed with a caveat: People could prefer services that have some sort of contractual agreement for perpetuity to never do anything creepy with your stuff. Those services would by definition have to have some sort of paid angle or make due with dumb ads. Now most people don't care but it's possible someone could, in DDG fashion, try and leverage the "don't be creepy" angle.
  - bksenior 14y ago
    Perpetuity is a funny word when it comes to the law. In hindsight site it always seems to be a synonym for convenient.
pbiggar 14y ago
I'll bet instagram never thought of that! If only they had these guys coming in to tell them that they could charge for software. "Guys, if you charge just $5 a month - you'll have $300m a quarter!" Genius! Great reporting Atlantic, I'm normally a fan, but this is quite poor.
- saurik 14y ago
  This article's claim (even stated in the title) is not that Instagram should have charged, but that users should demand to pay. The article is not written for Instagram: it is written for users. > Truly, the only way to get around the privacy problems inherent in advertising-supported social networks is to pay for services that we value. It's amazing what power we gain in becoming paying customers instead of the product being sold.
  - pbiggar 14y ago
    But then: > Here's an alternative version of what Instagram could have done
    - saurik 14y ago
      <- ...were users to like paying for such things or even demand to do so (which they aren't, hence why this article was written at all, but this is a cool universe in which we could live: imagine it!)...
  - zalew 14y ago
    > users should demand to pay People have a hard time paying for parking space, yet some claim those same people should demand paying for the ability to upload a small file to the internet. I don't think anybody outside of the tech bubble treats such advice seriously.
    - saurik 14y ago
      ... so because the attempt is futile, you are saying we should pretend he didn't say it, and interpret the rest of his article in that light? FWIW, I have a friend in the planning division of the city I live in, and just a few days ago we were having a discussion about the issues with parking. http://www.amazon.com/High-Cost-Free-Parking-Updated/dp/193236496X http://www.amazon.com/High-Cost-Free-Parking-Updated/dp/1932... People certainly can and do make arguments that people should demand to pay for parking, as to do anything else causes even worse problems.
AndrewKemendo 14y ago
Wasn't app.net largely using similar sounding arguments to reasonable effect? This isn't anything new.
graue 14y ago
I think this is actually an argument for open protocols. If Google put this clause in the terms of service for Gmail, you could switch to Yahoo! Mail, or you could switch to Fastmail.fm, or whatever else. But when it's a proprietary social network, you can't switch (in practice), because all your friends and followees are on Instagram - not the other thing that you switch to. When services interoperate using open, decentralized protocols, competitive pressure helps keep a lot of the ugly stuff out of their Terms of Service. We all win. But with Instagram, or Twitter, or Facebook, one company has a complete monopoly on a particular combination of (functionality + approximation of social graph). Competition is locked out, and only regulation can prevent the company from doing whatever they want.
- X-Istence 14y ago
  No I couldn't switch, unfortunately my username is at gmail.com, I don't get to chose to change providers and keep that same address. You can forward it you say, sure I can, but at that point Google still gets to use my information as it pleases.
  - lazerwalker 14y ago
    That's an argument for custom domains: if your email address is [yourname]@[yourdomain].com, it's easy to switch from Google Apps to a different provider. Finding a way to make that a viable option for non-techies is, sadly, an exercise left for the reader.
    - X-Istence 14y ago
      Absolutely. As a techie I have regeer.org registered, so bertjw@regeer.org can be move anywhere I want. However I was simply bringing up that it isn't easy to move email providers.
    - pi18n 14y ago
      Making it a viable option would be simple, convincing people that they need it would be the trick.
- 14y ago
fpgeek 14y ago
Why It Doesn't Matter If You Pay for Software, Sparrow Edition http://mattgemmell.com/2012/07/21/entitlement-and-acquisition/ http://mattgemmell.com/2012/07/21/entitlement-and-acquisitio...
crististm 14y ago
"You might call this the anti-free-software movement." - More like anti-free-services movement. There is nothing wrong with free software.
belorn 14y ago
>It's amazing what power we gain in becoming paying customers instead of the product being sold. Since when did customer have any power what so ever in regard to products and services? DRM'infested products, streaming services that throw anti-piracy ads down consumers throat, and other similar things. Paying for a product or service don't mean that a company will suddenly start acting ethical.
001sky 14y ago
This is basically like assigning a copyright to all your creative work for free to FB/Instagram to use for Marketing Purposes. Seems Non-trivia, if it is true. TL;DR==Bait and Switch. Oldest game it town.
eloisant 14y ago
The sad truth is that even when you pay, the service will still monetize your profile and data.

67 points by speednoise 14y ago

zalew 14y ago

"X has Y millions of users, if they charged $5..." yeah, right. I am willing to pay for online services, but sharing phone pictures of coffee mugs or posting status messages isn't one of them. I bet most people feel the same.

jacktoole1 14y ago

While I agree with the overall sentiment of the article, the hypothetical monetization numbers in the last paragraph are just ridiculous. Getting 20% of a free userbase to pay anything is extremely high. ~0.2% to 2% sounds like a more likely number, based on my admittedly cursory knowledge of monetization of apps. $5 a month also sounds a bit high for essentially a photo-sharing service, a yearly charge of ~$20 sounds more likely. However, for users that have passed the "willing to pay anything" barrier, the actual cost might not as big a deal. This also completely ignores the viral nature of these types of services; people are more likely to use Instagram when their friends are using it. Without being free, it's not clear whether it would have taken off enough to gain 2 million users (or whether it could keep 2 million after the remaining 98 million left). That said, I'm all for paying for services, and much prefer that model to ads. But just because some of us would prefer that doesn't mean it would have been the right choice for Instagram. It's easy to look back and say "they should have charged users," but we can't be sure we'd be in a place to analyze them if they had.

SoftwareMaven 14y ago
I completely agree. But it would sure be nice if there was an option that said "Terms of Service A is free; Terms of Service B is $X/month". Then I could make the decision about whether the service/privacy/cost tradeoff is important enough for me to shell out either cash or privacy. This is especially true at points like this, when a service is trying to "go to the next level" in terms of revenue. Use the free stuff to get people hooked, then let people decide how to pay for their habit. If you can make $25/year off of me through my private info, let me decide if I want to pay $25/year for your service (which is, quite literally, pocket change). As it is, I'll just stop using your service (like I'm going to stop using Instagram).

sounds 14y ago

The Atlantic is being deliberately misleading here. Pay for Software? I think they should have said, "Why You Should Pay for Internet Service." That is, unless there's a way for you to download Instagram's entire service as a package and install it on your own infrastructure (not likely), you aren't ever going to pay them for "software." If you pay them, it will be a subscription to their service. I think the real culprit here is actually Google, who can (and do!) release all kinds of useful free services. They then actively support the misconception that all online services should be free – this helps them because consumers then make the error of assuming that this is reasonable; meanwhile, Google benefits as consumers turn a blind eye to their data mining, advertising, etc. I suppose it would be fair to blame all the large cloud providers competing in the same space (Microsoft and Yahoo for example). However, Google was the first to try this and arguably the most successful.

rgbrenner 14y ago
Google was not even close to being the first to give away services. Hotmail and Yahoo mail were around before Google even existed. And that's just the first two that came to mind.
- sounds 14y ago
  That's not what I said, of course. Google doesn't just "give away services:" They release all kinds of useful free services. They then actively support the misconception that all online services should be free – this helps them because consumers then make the error of assuming that this is reasonable; meanwhile, Google benefits as consumers turn a blind eye to their data mining, advertising, etc. In other words, Google was the first to really push what could be done in free services. Sure, HTTP was a "free service" before Google ever existed – but that's not my point. Search engines existed before, but Google took a first step by placing the search results first – instead of the flashing banner ads.
  - rgbrenner 14y ago
    I remember the 90s before Google existed. There were search engines without ads. Search engines added ads after gaining an audience, just like Google did. Text ads were invented by Overture, another search company, before Google existed.

bksenior 14y ago

This make a wildly naive assumption that paying for a product somehow makes it less likely that they will monetize your likeness. The truth is large companies with any swath of investors are expected to grow, thats how money is made. This means that there will need to be constant new revenue streams added on. TLDR: Paying for any app just delays the inevitable monetization of content as the company is forced to expand and create more revenue.

Steko 14y ago
Agreed with a caveat: People could prefer services that have some sort of contractual agreement for perpetuity to never do anything creepy with your stuff. Those services would by definition have to have some sort of paid angle or make due with dumb ads. Now most people don't care but it's possible someone could, in DDG fashion, try and leverage the "don't be creepy" angle.
- bksenior 14y ago
  Perpetuity is a funny word when it comes to the law. In hindsight site it always seems to be a synonym for convenient.

pbiggar 14y ago

I'll bet instagram never thought of that! If only they had these guys coming in to tell them that they could charge for software. "Guys, if you charge just $5 a month - you'll have $300m a quarter!" Genius! Great reporting Atlantic, I'm normally a fan, but this is quite poor.

saurik 14y ago
This article's claim (even stated in the title) is not that Instagram should have charged, but that users should demand to pay. The article is not written for Instagram: it is written for users. > Truly, the only way to get around the privacy problems inherent in advertising-supported social networks is to pay for services that we value. It's amazing what power we gain in becoming paying customers instead of the product being sold.
- pbiggar 14y ago
  But then: > Here's an alternative version of what Instagram could have done
  - saurik 14y ago
    <- ...were users to like paying for such things or even demand to do so (which they aren't, hence why this article was written at all, but this is a cool universe in which we could live: imagine it!)...
- zalew 14y ago
  > users should demand to pay People have a hard time paying for parking space, yet some claim those same people should demand paying for the ability to upload a small file to the internet. I don't think anybody outside of the tech bubble treats such advice seriously.
  - saurik 14y ago
    ... so because the attempt is futile, you are saying we should pretend he didn't say it, and interpret the rest of his article in that light? FWIW, I have a friend in the planning division of the city I live in, and just a few days ago we were having a discussion about the issues with parking. http://www.amazon.com/High-Cost-Free-Parking-Updated/dp/193236496X http://www.amazon.com/High-Cost-Free-Parking-Updated/dp/1932... People certainly can and do make arguments that people should demand to pay for parking, as to do anything else causes even worse problems.

AndrewKemendo 14y ago

Wasn't app.net largely using similar sounding arguments to reasonable effect? This isn't anything new.

graue 14y ago

I think this is actually an argument for open protocols. If Google put this clause in the terms of service for Gmail, you could switch to Yahoo! Mail, or you could switch to Fastmail.fm, or whatever else. But when it's a proprietary social network, you can't switch (in practice), because all your friends and followees are on Instagram - not the other thing that you switch to. When services interoperate using open, decentralized protocols, competitive pressure helps keep a lot of the ugly stuff out of their Terms of Service. We all win. But with Instagram, or Twitter, or Facebook, one company has a complete monopoly on a particular combination of (functionality + approximation of social graph). Competition is locked out, and only regulation can prevent the company from doing whatever they want.

X-Istence 14y ago
No I couldn't switch, unfortunately my username is at gmail.com, I don't get to chose to change providers and keep that same address. You can forward it you say, sure I can, but at that point Google still gets to use my information as it pleases.
- lazerwalker 14y ago
  That's an argument for custom domains: if your email address is [yourname]@[yourdomain].com, it's easy to switch from Google Apps to a different provider. Finding a way to make that a viable option for non-techies is, sadly, an exercise left for the reader.
  - X-Istence 14y ago
    Absolutely. As a techie I have regeer.org registered, so bertjw@regeer.org can be move anywhere I want. However I was simply bringing up that it isn't easy to move email providers.
  - pi18n 14y ago
    Making it a viable option would be simple, convincing people that they need it would be the trick.
14y ago

fpgeek 14y ago

Why It Doesn't Matter If You Pay for Software, Sparrow Edition http://mattgemmell.com/2012/07/21/entitlement-and-acquisition/ http://mattgemmell.com/2012/07/21/entitlement-and-acquisitio...

crististm 14y ago

"You might call this the anti-free-software movement." - More like anti-free-services movement. There is nothing wrong with free software.

belorn 14y ago

>It's amazing what power we gain in becoming paying customers instead of the product being sold. Since when did customer have any power what so ever in regard to products and services? DRM'infested products, streaming services that throw anti-piracy ads down consumers throat, and other similar things. Paying for a product or service don't mean that a company will suddenly start acting ethical.

001sky 14y ago

This is basically like assigning a copyright to all your creative work for free to FB/Instagram to use for Marketing Purposes. Seems Non-trivia, if it is true. TL;DR==Bait and Switch. Oldest game it town.

eloisant 14y ago

The sad truth is that even when you pay, the service will still monetize your profile and data.