Following up on my presentation at eComm last week, I was asked to provide a little more background on my comment about the three degrees upon which customers pay.  They pay on three dimensions: cash, time and privacy; creating a ‘Customer Pay-Space.’  It’s important to remember with the non-cash dimensions (time and privacy) value is originating from the user and that value has ownership, as Facebook learned last month – disregard customer privacy at your peril.

Paying by cash is a tradition in the telco industry, e.g. for internet access or voice minutes.

Paying by time (i.e. advert sponsored) is a tradition in web-based services, e.g. search or portals.  I use the term ‘time’ to identify the value customers are providing, as attention is perhaps too strong a term.  Examples of the time I refer to are: the distraction of advert banners or sponsored links, the time taken to download banner adverts (experience the premium weather.com service to realize the time it wastes), the time taken after clicking ‘no’ on the sponsor’s redirect, and those euphemistic ‘breaks’ in TV programming.  Now cash does flow from the advertiser to the service provider; but my focus here is the customer and their pay-space; not the service provider.

Today we see growth in the use of privacy (personal information) for targeted advertising and aggregated services such as road traffic monitoring.  For example, TomTom partnered with Swisscom to introduce its TomTom High Definition Traffic system in Switzerland – which caused much consternation in Switzerland even though the data was anonymous.  The privacy of personal information matters intensely to people, hence why I draw it out as a separate dimension in the pay-space.

Examining the dimension of the pay-space in a little more detail:

• Cash: When people pay for a service, even if it’s a token amount, their expectations are much higher than when the service is perceived to be free because of payment through time and/or privacy   For example, fixed mobile convergence services continue to struggle because customers expect the service to be as good as their traditional fixed line service.
• Time:  We’ve see the emergence of ad-sponsored services such as Blyk, and the recently announced tie-up between ZingMagic (checkout link at bottom of main page) and Liquid Air Lab for innovative ad-sponsored mobile gaming.
• Privacy: Covers the use of personal information such as context (e.g. location and status), through geo-demographic information, to user-generated content.

A critical issue in the time and privacy axes is the large variation in the value customers’ assign to these axes.  For example, at my stage in life time is precious, so advertising annoys me (intensely as a matter of fact, that’s one of the reasons I do not use ads on my weblog – do unto others…).  On privacy while I’m happy to share much information with friends and colleagues, however, I draw the line at my travel plans (I don’t do Tripit).  I also hear people talk about how ‘teens’ have few privacy concerns, as they are ‘net natives.’  Here are the results from a Pew Internet & American Life Project, “Teens, Privacy & Online Social Networks:”  55% of online teens have profiles online; 45% of online teens do not have profiles online.   Among the teens who have profiles, 66% of them say that their profile is not visible to all internet users.  3% of online teens and 5% of profile-owning teens disclose their full names, photos of themselves and the town where they live in publicly-viewable profiles.  So clearly most teens do care about privacy, the media tends to pick up on a few sensational outliers and the classic observation error ensues.  We’re all different, and will continue to be so.

As we explore the third dimension of the pay-space; privacy.  And with the renewed focus on the second dimension of time, as advertising becomes increasingly intrusive to counteract the low click-through rates and conversion-to-sales rates.  It’s going to be critical to let the customer choose where they want to be in the pay-space.  It may be that the space collapses into 2 states; cash or targeted advertising.  But I hope we can find a way to give customers choice over where they sit in the pay-space that enables the current rich service experience to continue unabated and expand into the mobile and cable industries.