The Network Defect

The hard part about privacy is that it’s only as secure as the weakest link. The technology is well established, but it only works if the people you want to talk to are using the same thing you are.

Getting people to switch, especially if there’s a financial cost involved (essentially a requirement to ensure privacy) is notoriously difficult due to the network effect . However I have an idea that is nothing more than a re-framing of the relationship between a product and it’s customer that might help break this effect.

Imagine a secure private message service akin to Silent Circle , etc., but instead of charging each user a subscription fee to access the system, you sell a subscription that allows each customer to add some number of other users for no additional cost.  This allows someone with a strong personal interest in the product to start using it without having to convince others to purchase additional subscriptions.

There is a secondary effect at work here as well.  When someone asks you to sign up for something that is free, it can feel like a burden, but when someone gives you a gift, one that would otherwise come with a financial cost, people tend to look at that differently.  I imagine there is a formal psychological term for this phenomenon.  What I’ve observed directly is that people tend to be willing to invest more time in something proportional to it’s cost.  So when you ask your friend to join a free service to talk to you it may seem like a burden, but when you present them with a gift that would otherwise cost them money, it’s both more compelling, and also carries an obligation to at least try it out (to appreciate the gift).

The counter argument to a system like this is that it can be “gamed” or otherwise exploited.  A group of people who want to get a better deal could simply sign one person up and then split the monthly fee, effectively getting away with something.  It’s probably obvious to you that is simply an socially- orchestrated fall-back to the old one-subscription-per-user model.  If the pricing for the service has been established correctly this has no negative impact on the sustainability of the system, provides the subscribers with a feeling of satisfaction and actually reduces operational cost compared to the original one-bill-per-subscriber model by reducing the administrative overhead of billing each account.

The key is to establish a system whose operational cost scales in-step with paid-subscriber revenue, and a paid-subscriber to unpaid-subscriber ratio that fits into this equation.  This might sound difficult but here again it’s actually no different than the same service where each subscriber pays, except that you multiply the subscription cost by the number of non-paying subscribers each paying subscriber is allowed to grant free subscriptions to. An interesting side-effect of this is that it is unlikely that every paid subscriber will fill every unpaid subscriber “slot” they are granted, so the revenue-per-paid-subscriber will actually be higher than a service which requires every subscriber to be a paying subscriber.

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// jjg

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