The best things in life are free, and the same can be said for web-services and user generated content and data.
Google was first to tap into the benefits of “free” when it created a clear formula for its online offerings, giving away services, in exchange for users surrendering a fair amount of their privacy which Google uses for targeted ads. Google makes plenty of money this way, proving there’s really no such thing as a “free lunch” or free app, so to speak.
But Google’s formula works even better when applied to social oriented services, and other firms are following suit.
Facebook is already building an advertising network that learns the user’s surfing habits via the links people share, using the information to display ads more relevant to the particular account holder.
Israeli firm Waze, which offers a navigation application based on the user’s community, has also decided to cash in on the free money making model.
Waze’s offering is a social mobile application which enables drivers to build and use real-time road intelligence, based on constantly-updated road maps, traffic and accident alerts, as well as other data to help users find the fastest route to wherever they need to go.
Waze’s community is instrumental in the data loop, with map and traffic updates automatically collected and generated as users drive with Waze activated. Waze users can also actively report and update other users with what’s happening on the road including information about police traps, weather hazards, cheap gas offers and more.
And the best part? Because the map and all its content is driver-generated, Waze offers its services for free. The firm doesn’t need to generate its own information, its users do that for it, creating a near-perfect symbiotic app experience.
The power of users is tremendous; just ask Facebook how it managed to translate the platform into more than 100 languages for, you guessed it, free.
When a user community loves a service and wants to make it even easier to use, it doesn’t take much incentive to push them into contributing and taking over the workload.
In the case of Facebook translations, the firm simply offered the unpaid work as a challenge and gave users points to motivate them into continuing to contribute. After all, they’d probably just be sitting around playing Farmville anyway.
Waze is now following in Facebook’s footprints, through users’ smartphones. The more information and data a user contributes, the more points he gets.
The highest ranking contributor will apparently get a free iPhone at the competition’s conclusion on Israel’s Independence day, April 20th 2010.
Meanwhile, Waze is growing bigger every day and continues to expand to other platforms, offering a quality service built on user generated data it collected for “free” whilst collecting its own paycheck from “relevant third parties” that it sells the collected data set (maps, traffic, etc) to.
All of the above goes to prove that where “free services” are on offer, users are quite willing to forgo their own privacy, share their data and let their free app giving benefactors use it for their own profit. That will be the growing model for app monetization in the future.
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Harel Shattenstein is a freelance contributor to RCR Unplugged, residing in Tel Aviv, Israel.
