

Why You Should Want to Pay for Software, Instagram Edition - speednoise
http://www.theatlantic.com/technology/archive/2012/12/why-you-should-want-to-pay-for-software-instagram-edition/266367/

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jacktoole1
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
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).

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graue
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.

~~~
wting
I think you mean control of your data, rather than open protocols. For
example, you can still access your Gmail via IMAP.

It would be great if users could have a decentralized store of the private
data, and merely gave websites or applications access to the data.
Unfortunately this is a privacy geek's pipe dream, as data hosting costs and
complexity would result in low adoption rates (e.g. setting up your own OAuth
server).

On a side note, this is a another area where Google+ falls behind Facebook.
Facebook is a platform for other apps. Sometimes this results in stuff like
Zynga spam, but there are good use cases such as allowing Twitter / Instagram
apps to post in more than one location. Vic Gundotra has stated in interviews
that Google wants a single conversation thread rather than have it fractured
across different platforms, but that strategy is an all or nothing approach
and they're late to the social networking game.

~~~
graue
> ... _users could have a decentralized store of the private data, and merely
> gave websites or applications access to the data._

I have to ask, are you familiar with Tent? (<https://tent.io>) You just
described exactly what they are setting out to do (and on a basic, somewhat
limited level, already do).

I agree the effort faces serious challenges, but as I hoped to illustrate with
my email analogy, it doesn't require every user to set up their own server to
benefit. You could choose between keeping your data with a hypothetical GTent,
or Yahoo! Tent, or Fasttent.fm, whichever one had the best policies, ad-
supported or, if you prefer, paid.

~~~
nwh
The issue with a distributed social network is that it doesn't scale well, and
there's no amount of tricky coding that can change that.

Imagine I have a thousand friends on a distributed Facebook-clone. I post a
photo, and that instantly gets pushed to anywhere up to one thousand different
servers. Every server has to store a copy and index it. If that was a 1MB
image, I just pushed a solid gigabyte of data out. Pushing an album of 50
photos pushes that to 50GB, or 5% of my dedicated servers allocated bandwidth
for one users photo album.

There's no way an individual or group is going to be able to host their own
servers. The whole system just dissolves down to a single large provider
serving the vast majority of people, and we're back to Facebook again.

It's a great idea when you sketch it out on paper, but it becomes impractical
very rapidly.

~~~
pi18n
This is a practical use case for Bittorrent.

~~~
nwh
And asymmetric encryption.

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bksenior
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
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
Perpetuity is a funny word when it comes to the law. In hindsight site it
always seems to be a synonym for convenient.

------
sounds
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
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
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
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.

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pbiggar
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
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.

~~~
zalew
> 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
... 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/1932...](http://www.amazon.com/High-Cost-Free-Parking-
Updated/dp/193236496X)

People certainly can and do make arguments that people should demand to pay
for parking, as to do anything else causes even worse problems.

~~~
zalew
I was curious if somebody will bring this title to the table as I've found
this book some time ago on Goodreads, but frankly, 800p about this subject is
a TLDR for me.

My point was, while I think people should be comfortable paying for services,
claiming they should demand to pay instead of getting it free is a bit absurd.
It's not like there are no paid more feature-rich alternatives for uploading
photos, or that web users just don't pay for online; it's just that Instagram,
Twitter & co wouldn't grow to those numbers if they were a paid service. Prove
me wrong, but I also got the feeling Pinboard users are there for the
statement, not because they believe bookmarking links is worth $10.

------
zalew
"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.

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

------
fpgeek
Why It Doesn't Matter If You Pay for Software, Sparrow Edition

[http://mattgemmell.com/2012/07/21/entitlement-and-
acquisitio...](http://mattgemmell.com/2012/07/21/entitlement-and-acquisition/)

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belorn
>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.

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

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

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001sky
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.

