Would Users Pay for Privacy?

In the keynote speech at yesterday's Geoloco conference on the future of geo-location services, venture capitalist Fred Wilson said businesses could profit from privacy, ReadWriteWeb reports:

"When you reveal your specific location, it's very important that you have control over that... There are business opportunities in privacy-related services," Wilson says. "The challenge is to get someone [whether business or consumer] to pay $2-$10 dollars per month to ensure that sort of premium privacy."

Large social networks would have trouble revoking the fine-tuned privacy controls users are used to, said Wilson, whose firm Union Square Ventures is invested in Twitter, del.icio.us, Etsy, and Disqus. But that's not a concern for startups which can start with a pay-for-privacy model.

Econsultancy's Patricio Robles points out that there is almost no acceptable way for a large social network to undo such controls. Users would see such a request as being closer to extortion than a reasonable shift in a business model, she argues.

But while it may be impossible for large social networks to profit from privacy, could startups? For better or worse, users are hypocritical about their privacy concerns: Facebook just got its 500 millionth user despite having a lower consumer satisfaction score than the IRS and despite repeated findings that even young people want more privacy. Why? Part of it surely has to do with scale: alternatives exist, but none has nearly as many of your friends signed up.

If a startup offers an innovative free service with a fee for privacy, its unique offering could lead to rapid growth. Once any scale is achieved, concerns over paying for privacy take a backseat to the practicality of using a popular service.

Plus, this isn't a new idea. We already enter purchase agreements where the default is sharing and there's a fee for privacy. Traditional phone companies charge to keep a number unlisted or hidden to Caller ID systems. The same goes for domain name registration: information about the registrant of any .com, .org, .net, etc. is available through a WHOIS query, unless you pay extra to have the domain registered by a third-party.

We already pay privacy premiums. The question is could a startup with a pay-for-privacy model ascend fast enough to prevent losing its business to a free or ad-supported competitor?

Presented by

Niraj Chokshi is a former staff editor at TheAtlantic.com, where he wrote about technology. He is currently freelancing and can be reached through his personal website, NirajC.com. More

Niraj previously reported on the business of the nation's largest law firms for The Recorder, a San Francisco legal newspaper. He has also been published in The Hartford Courant, The Seattle Times and The Age, in Melbourne, Australia. He's also a longtime programmer and sometimes website designer.

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register with Disqus.

Please note that The Atlantic's account system is separate from our commenting system. To log in or register with The Atlantic, use the Sign In button at the top of every page.

blog comments powered by Disqus

Video

A New York City Minute, Frozen in Time

This short film takes you on a whirling tour of the Big Apple

Video

What Happened to the Milky Way?

Light pollution has taken away our ability to see the stars. Can we save the night sky?

Video

The Faces of #BlackLivesMatter

Scenes from a recent protest in New York City

Video

Ruth Bader Ginsburg on Life

The Supreme Court justice talks gender equality and marriage.

Video

The Pentagon's $1.5 Trillion Mistake

The F-35 fighter jet was supposed to do everything. Instead, it can barely do anything.

More in Technology

Just In