Will IoT Spell The End of Freemium?


In-brief: will growing fatigue over data collection by marketing firms and the advent of IoT spell the end of the “freemium” business model? The answer is: maybe, yes. 

A spate of recent articles are raising questions about just where businesses should draw the line when it comes to the Internet of Things ability to conduct wholesale data harvesting from individuals, and the current mania for “freemium” business models based on monetizing that data.

With enthusiasm among consumers for sharing their personal data in exchange for “free” services already waning, experts wonder whether businesses that hope to cash in on the Internet of Things will need to offer different models, including options that allow consumers to pay a premium for services in exchange for protecting their personal data.


This article at The Guardian, for example, picks up on the debate at a recent London conference on the Internet of Things summit sponsored by the IoT consortium HyperCat. Speaking at that event, Stephen Pattison of the UK-based chip maker ARM said that one option is for IoT services to offer discounts to users who share their data, but only as part of a pricing model that offers real choice.

“You can’t have a world where you’ve got companies saying … if you don’t hand over all your data you don’t get this service at all,” Pattison said.

Recent research suggests that consumers are despairing of the possibility of protecting their personal data online. A research paper by a team at the University of Pennsylvania, for example, found that Internet users are unhappy with the way their privacy is undermined by advertisers and online companies, yet feel there is nothing they can do about it. Resignation, rather than acceptance, was the attitude of most consumers when it came to sharing their personal data with advertisers, the researchers found.

One fix would be a data “Bill of Rights” that ensures a basic, minimum level that consumers can’t sign away, suggested Lord Erroll, chairman of HyperCat. Such a guarantee would protect users from unknowingly handing over too much data and have the secondary effect of  rebuilding trust companies that collect information online, he said.

Alternatively, companies might decide to act as middlemen in the online data ecosystem, suggested John Davies, the chief researcher at BT: collecting data from consumers and then sharing it with approved third parties, in the same way that PayPal brokers credit card transactions online.

Read more here.

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