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Summary:

Rightly or wrongly, Facebook catches a lot of flak for impeding on privacy by selling user information to advertisers and generally enabling too much sharing. But would users care so much if Facebook gave them a cut of the profits it generates by selling their data?

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Rightly or wrongly, Facebook catches a lot of flak for impeding on privacy by selling user information to advertisers and generally enabling too much sharing. But would users care so much if Facebook gave them a cut of the profits it generates by selling their data? Think about it like Plink’s new loyalty program that rewards consumers with Facebook Credits for eating at certain restaurants, only in reverse.

I suggested this Thursday as a possibility for empowering users across the web, generally, but Facebook (and maybe Google) actually seems like the perfect company to pull it off. Facebook wants more than anything for users to share as much information as possible, because the more information it has, the more money its ads sell for. That’s why it’s always adding somewhat creepy new features, tweaking its privacy settings and, occasionally, resetting the defaults to maximum-share mode.

All of this gets privacy advocates and even Facebook users in a snit, though, because it’s pretty much a one-way street: Facebook gets more money, while users get, um … more Facebook? Everyone knows that users pay for free services by providing their data, but clearly some are starting to sense we’re reaching limit of that model still being a good deal for consumers.

“Like” Starbucks, get a nickel

So, why not encourage sharing and discourage privacy complaints by giving users a piece of the revenue pie? The more they share, the more Facebook pays them. It’s actually not such a crazy idea, and it will be even less crazy if the group of Facebook users currently suing the company over violating their rights to publicity wins its case. The plaintiffs want a piece of additional money Facebook thinks it can get from selling “Sponsored Stories.” To quote from their complaint, quoting Facebook CEO Sheryl Sandberg:

On average, if you compare an ad without a friend’s endorsement, and you compare an ad with a friend’s [Facebook] ‘Like,’ these are the differences: on average, 68% more people are likely to remember seeing the ad with their friend’s name. A hundred percent—so two times more likely to remember the ad’s message; and 300% more likely to purchase.

This is where the Plink analogy comes in. Its new service automatically credits users’ Facebook accounts with Facebook Credits when they use their credit cards at certain restaurants. It encourages consumers to eat at certain places by rewarding them.

Facebook could conceivably encourage users to engage in particularly beneficial types of sharing by rewarding them. You “Like” a company’s page, you get a nickel (or, likely, a more-complex formula). If it doesn’t want to deal in cash, which might be impossible economically, Facebook could start frequent-flyer-style ecosystem for Facebook Credits. Users earn Credits for sharing and redeem with retailers across the web, maybe even via a “Pay with Facebook Credits” option on third-party sites (assuming that’s legal).

I can tell attest to the power of that type of program. Legal databases LexisNexis and Westlaw compete to win future professional users by providing points to law students for frequently using their products, as well as for completing occasional “fun” (but not really) research challenges. I used them more than I otherwise might have just to earn points, and I got some sweet merchandise from partner retailers in return for my trouble.

As long as the pay-with-data model continues to get more lopsided in favor of websites, web users and consumer-rights groups will continue to get more upset. If the alternatives are make users pay or have someone else enforce strict privacy regulations, why not try something completely different? Maybe that way, when the government comes knocking, Facebook’s users will have its back.

Zebra image courtesy of Flickr user macinate.

  1. Actually, I’d rather pay them for a premium, privacy protected experience.

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    1. That’s another idea I suggested earlier. If free services are no longer worth the presumed invasions of privacy, it might have to come to that.

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  2. No. Never. Nada. Zilch. Absolutely not. Did I make my point clear? No way, Jose!

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  3. The entire reason that companies like Facebook are capable of generating so much money is that they take the information of half a billion people. A single person is almost worthless to Facebook, but when added together, all of those almost worthless sources of information become highly profitable. To pay each one of those people back with sums even as nominal as those suggested by this article would spell bankruptcy for Facebook.

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    1. Actual financial rewards very likely would be too expensive, and I think I noted as much in the article. Although, there could be a clever way of doing it if Facebook could somehow anonymously attribute revenue gains to individual users — for certain value-added activities such as creating a Sponsored Story — and pay back a fraction of the additional revenue.

      It’s more likely that a frequent-flyer-type program could work, where Facebook, partners and users feed off each other.

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  4. I think people will always respond very favorably to services that recognize that their patronage (viewing ads, buying content, etc.) is worthy of some form of reverse compensation. One area that is begging for attention is bandwidth cost (especially on mobile devices where one gets hits with large overage fees for “blowing their data cap” each month). We think that apps accessing data from popular sites/services should be “pre-bundled” with free bandwidth since this is a great way to reward end-users for viewing / renting / buying online content (just like the 1-800 voice model). The technology is just being rolled out (called “FreeBand”) and we think the mobile carriers will be offering such a service to end-users shortly. Also, by providing “free delivery” of bytes, it is a much simpler and immediate form of compensation than paying cash or points (although not mutually exclusive either).

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  5. How ironic reading this after earlier today reading GigaOm’s privacy policy that states basically, they are in bed with Facebook/linkedIn… Why would GigaOm need such vast swatches of my personal info if they didn’t profit off it? They write articles like this and simultaneously play both sides of the privacy fence. Feels wrong.

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  6. Dave Goldblatt Monday, February 13, 2012

    Facebook does NOT sell your information. Please correct this in your article. See https://www.facebook.com/help/?faq=152637448140583

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