Social network chief execs are deliberately killing privacy for commercial gain, according to security guru Bruce Schneier. Schneier said: "Less privacy makes a better market for social networks. Facebook is the worst offender - not because it's evil but because its market is selling user data to its commercial partners." …
How is the money made again?
Essentially, the likes of Facebook, twatter, bebo, orkut et al have developed the quasi alchemic formula for turning sh1t to gold. I guess if you've got a critical mass of ordure, you can use it to print money? Personally, I prefer to be in private when taking a dump.
In the case of Bebo, you flog it to gullible idiots (AOL) for $850 *MILLION*, and the said gullible idiots suddenly realise they've been sold a donkey masquerading as a racehorse and manage to sell it on at $10M. A lovely little loss of 99.9%.
You have to wonder how AOL stay in business, you really do. Perhaps they can recall all their AOL sign-up discs and sell the polycarbonate as a fundraiser.
Is it not AOL-Time-Warner? If it is, they make their money accross all media types, and i would argue that internet isn't their number one. Massive fail though.
Wish i was Mr Bebo though, some people made A LOT of money there.
Welcome to the world of Web 2.0 Bruce
And you really do not want to know what Web 3.0 will be...
Ive always had a lot of time for Schneier
When I discover that Lovefilm has decided to enter a mutual user-information-share-fest with Facebook, I find myself having to unsubscribe from something I opted into, because it is turning into something I opted out of. Eventually, I'll have been forced to opt out of everything, and will have to retrain as a rogue, freelance plumber, or something.
Subtract me... Subtract me...
Your business practise simply don't attract me.
Yes and no
Schneier is here not very innovative - that Google and Farcebook were killing privacy for money is not exactly a new discovery. But it's good that he repeats it.
In general, now the axis of evil Bush -Blair/brown for privacy has gone, the swing is coming back. Privacy will become more important, which is why those companies make all that wannabee noise. But it's mostly privacy theater - Farcebook can still "improve" your privacy settings overnight, and with Google keyword scanning your email it means you're only one programming mistake away from disclosure.
The problem is that especially the Bush administration has openly demonstrated just how enthusiastically it can ignore rights and international agreements. As a consequence, it has lost trust on a global scale, and any US company shares in that. And if you read Google's Terms of Service you will find chapter 11 not very comforting..
"Subtract me... Subtract me...
Your business practise simply don't attract me."
Bravo! You, sir, are the next Bob Dylan.
Luckily, there's one fundamental right they can't take from you:
the right not to sign up in the first place
You signed up already.
Or rather, no sign-up is needed. After all, every time you use a search engine (ANY search engine AFAIK), you give away data for free that ad agencies will use to slam targeted ads in your face. And to make sure they know who you are, they tap your identity in ways law will be hard-pressed to stop (because they'll counter with, "break this, break the Internet" tactics). If you're on the Internet, they probably know all about you already, and if you're not, they'll find a way to tap into you (telephone calls, TV channels, traffic cams, cell phone traces, et al) unless you turn totally Luddite.
I have an ad-blocker to look at those ads for me
as for its tastes, well, I respect its privacy
Targeted ads and data mining
While it's true that farcebook or no, your data is being mined till it squeals, avoiding seeing any targeted ads is pretty easy (if tedious), in the UK at least, and without much in the way of expertise.
Register with the Telephone, Fax and Mail Preference services, install ABP in your browser, write to the Royal Mail Door-to-Door Opt Out Dept, keep a couple of email addresses for online purchasing and forum sign ups and make sure you've got some sort of decent anti-spam measures in place. Most importantly, pay CLOSE attention at the bottom of forms and tick (or not) the "hey! I'd really love piles of irrelevant shit from you and other carefully selected 3rd party arsewipe merchants!". That should see the end of anything vaguely targeted - its worked well for me.
Time shift all commercial TV (why watch ITV anyway?) and mail Royal Mail Door-to-Door Opt Out Dept and you're finished with most of the general demographic targeting, just leaving billboards, print media and commercial radio, which I find too irritating to listen to anyway.
The data collection issue should be kept seperate from the targeted ads, as it's far more intrusive and harder to get rid of, and only a portion is used for targeting anyway - the other uses to which it's put are far more disturbing. Its so obvious that its depressing that someone like Bruce Schneier even has to comment on it. Its our data, and (with a few exceptions) decisions on how or if it will be used and the privacy implications of those should be ours alone to make. The government love to wave the ICO about as some sort of talisman, but until enforcement is quick and retributive, the greedy little fucks of the world will take the piss and laugh all the way to the Cayman Islands.
Currently the maximum fines could put a small business down, but wouldn't scratch the paint on even a moderately sized firm. Until penalties for using data in a manner not explicitly and freely consented to by it owner can put any large corporation out of business, they are no deterrent at all.
Nothing will change until the majority are aware of the value of what they give away for nothing. In the end, for all the efforts of activists, I suspect it will be those who gather the data who murder their Golden Goose through their inability to show moderation and keep their slavering greed in check.
They still keep information on you even in that case
Facebook keeps searches info so it already "knows" the list of people who have been interested enough to search for you. I strongly suspect that it keeps other information as well.
So the fact that you have not opted in does not mean that it does not have information on you, just the opposite.
"Or rather, no sign-up is needed. After all, every time you use a search engine (ANY search engine AFAIK), you give away data for free that ad agencies will use to slam targeted ads in your face."
"If you're on the Internet, they probably know all about you already"
Firefox + AdBlock + Beef Taco + Flash Block + HTTPS Everywhere + NoScript
That's not what "Anton Ivanov" was getting at.
You can do all you like to avoid directly giving away information, but you can still be identified by association.
To give a contrived example, if a dozen plumbers have Facebook accounts and they all search for your name, then it's a fair inference that you are either a plumber yourself or that you were recently looking to have some pipes mended. Given enough anecdotal data, I would suspect a fairly detailed picture could be drawn up of your own lifestyle.
How does facebook generate money?
Call me stupid.... but how exactly does Facebook make money - how did it make that Suckerberk bloke, or whatever his name is, a billionaire?
From obversing others that use it... they dont pay anything, there are little or no ads on the site, its doesnt try to sell you anything and they dont really do anything other than message each other, post pics, links to youtube videos and 'like' stuff, with a few idiots being addicting to things like farmvile.
Where does that much revenue come from? Who pays Facebook and for what?
Did you *read* the article?
Go back and read it again, this time without letting the Flash advert distract you -- the answer to the question you're asking is the whole point of Schneier's remarks.
Or, tl;dr: You are not Facebook's customer; you are Facebook's *product*.
Ask this: How does GOOGLE make money?
Because they work on similar principles. They let the users roam free because it is the user actions and input that they're really selling. They collect all the data for nothing and then turn around and sell it for bookoo bucks. You can't put a percentage to THAT kind of profit. Why do stores give away frequent shopper cards for free? Because they use them to tap shopping habits--same story. And the advertisers (who are having a devil of a time getting through increasingly-savvy people who learn how to filter out more and more ads) will pay good money for those key words that will get them into a consumer's face.
not that simple
"Call me stupid.... but how exactly does Facebook make money - how did it make that Suckerberk bloke, or whatever his name is, a billionaire?"
"Where does that much revenue come from? Who pays Facebook and for what?"
No-one outside of Facebook actually knows how much revenue or profit Facebook makes, because it's a private company and doesn't have to file this information publicly, but neither profit nor revenue are necessary to make Zuckerberg a billionaire. He's valued at billions of dollars on the basis of sales of shares in Facebook: if you assume that all Zuckerberg's shares are worth what others who've bought a smaller amount of Facebook shares, so far, have paid for them, then he's worth X billion dollars. He doesn't actually have X billion dollars, in cash, which Facebook made as profits and he took out of the business; it's not that simple. So Facebook makes Zuckerberg a billionaire because other people believe that Facebook is worth a lot of money and expressed that belief by paying lots of money for small shares of Facebook (the company). This belief was never actually based on the amount of revenue _or_ profit Facebook was making at the time these people / entities bought their shares.
Well, since you ask... It's a fiendishly cunning plan...
It goes like this: invent some half-arsed unmoderated blog-thing, which, by sheer coincidence, becomes the one thing that (for whatever reason) Google wishes it had invented...
With me so far?
Next you go to Steve Balmer and ask him for $260 million.
Finally, you bubble-bath in champaign - insulting everyone else for being 'dump fucks' - until the money runs out.
As a business strategy, the only flaw appears to be successfully pulling off Step One...
Re: How does facebook generate money?
Advertising, either directly, through third-party ad and search networks that buy big chunks of inventory and resell it, or by selling your info to marketers who use it in other channels.
OK I'll do it: you're stupid...
...and you seem to have failed to read the article.
Facebook is paid for it's users' details. As Mr Schneier points out, Facebook's customers are not it's users. They are it's raw materials.
do you block ads?
A D V E R T I S I N G
A D V E R T I S I N G
A D V E R T I S I N G
A D V E R T I S I N G
Reread your post
If Google wished that it invented it this means that there is money in it if you run it through the handywork of a good statistician with or without some input from applied math. They have approached near pefection in the art of sifting gold out of the random noise.
So in fact, if Google wants it there maybe money in it so no need to pull out at Step One. However, pulling this money out of it may be non-trivial. Google trail of trainwreck aquisitions and successes of competitors in the same areas is a testament to that.
We definitely need an icon of Eric Schmidt (or Vijai Gill for that matter) to add to Steve and Bill lineup. El Reg, please? Pretty, please?
You are the product that FB needs and everything you do, say, think, eat, shit, breath, fart, sniff, w**k is pure gold dust to the filth that inhabit the world of advertising.
You simply give a service away, gather all the info and sell it to the highest bidders in the ad world.
Spondoolicks by the cart load, will be your reward!
Post your own message
"How does facebook generate money?"...
they don't... much. Some ads, which apparently made them cash-positive a year ago. They seem to make a few tens of millions of dollars, on a turnover of maybe half a billion, but I don't think anyone knows for sure, as they're a private company and they don't say. They don't have any idea how to make money. They need to sell their user's private data, but they need a buyer, and they need some agreement from the users.
The huge figures you read about (a $15Billion valuation?) are based on the amount of money that MS put in, for a tiny percentage. Zuckerberg's own worth is a percentage of this paper valuation.
It Could All End Very Badly 2.0.
Ask this: How does GOOGLE make money?
>> Because they work on similar principles
Errr... no. They make money because I pay them £15/month, real money. And millions of others pay them far more than I do.
Stating The Obvious
Just can't wait for the author's writings on water being wet, heat being hot and politicians being crooked.
Maybe by the end of the next decade he'll discover that hot water is both hot and wet!
This reminds me, slightly off topic here, that "being wet" is a property of water, but NOT all liquids. Liquid mercury for example, not wet.
But, yes, you are right, this is hardly a story. Perhaps he will publish something about how google do the same thing? Sadly, i think El Reg will post that too.
Hardly news. (unlike, not all liquids being wet)
"The chief technology officer at BT Counterpane said that part of the threat to privacy comes from governments hiring private firms to get around privacy regulations"
So not say, from BT letting Phorm intercept all of its users communcation?
If you want "Privacy"
don't post things on social networking sites!!
Why don't people get this? I have locked down my account as much as I can reasonably do without giving up completely, but I understand that "Social" is another word for "Advertising specifically targeted at me". The dream of these companies being - to try and tempt you with things you statistically are more likely to want.
That may be evil, but it is not a secret, and because it is not a secret, I am posting it on the internet (and not just telling my close friends in the lug-'ole).
Meh, it's a form of payment.
While it's certainly true that a lot of people use Facebook in total ignorance of the data that is available about them, don't assume we all do. I consider it 'payment' for my use of the site. If they want to know what films I (or rather, an account that does not contain my full name) like, what music I listen to and who my bestest buddies are, then it can. It really makes very little difference to my life.
In any case, it's not like the data is that correct anyway. It keeps telling me to 'reconnect' with my girlfriend, presumably because all our communication takes place face to face or over the phone, and as far as Facebook is concerned we aren't talking to each other...
I for one...
Schneider manages to sound a bit like that russian taxi driver, "democracy? they inside the kremlin really should get on with making that work!"
Personally I think facebook provides a valuable service. Not because of what it says on the tin, but because its popularity puts privacy issues right in our faces. It bumbles, it stumbles, it gets people upset. And best of all, I don't have to sign up to watch everbody else fall on their faces. With facebook, I have that choice.
That's pretty cold-blooded, I know. But consider: Plenty of governments are doing far worse and continuously set the swelling tide of protests aside. Plenty of corporations are doing dark things without anybody noticing right up until somebody blows the lid off and lots of data spills out onto the streets. And once data is out in the open, it is out in the open. Even more so with privacy-sensitive data.
None of those give you any choice. Some, like my government, treats me like a criminal-without-rapsheet even for such simple things as obtaining a passport. And I have to present it any time anybody vaguely official demands it. Inside my own country. No, not in Blighty for the moment, but elsewhere it is very real. Back when a passport meant something else entirely. It makes me want to puke right down the prime minister's shirt.
What we need most, is awareness. We need to have a clear idea just why privacy is important, and we need everybody to understand it. After that, an idea how to continue with suitably strong privacy enforcing laws, systems, and most of all, ingrained practices. Then acquire all that. What we have simply doesn't do any longer. And we desperately need to get that message.
The same principle applies to Android
There's no such thing as 'free' services or software, including Facebook and Android. It seems free from the end-user's point of view, but they aren't the customer.
Personally, I'd rather pay for services and software. Then I know that I'm the source of the supplier's income, i.e. I'm the customer. If they don't deliver what I want, I can take my money to a competitor.
sheeple there's little difference, wool comes to mind.
Mint sauce anyone?
Users value privacy but aren't prepared to pay for it?
A pity really
It's just a pity that he hasn't said anything against Phorm...
In other news...
... you know the rest.
Attention Schneier: YOU value privacy. People do do NOT value privacy.
"There's no [commercial] market for a Facebook privacy add-on but if Facebook added extra privacy controls people would want it,"
People would also want a free pony if you delivered it to them.
And they would probably tend to the pony more than they would to their "privacy controls".
Depends if you ask the right question..
I spoke in Berlin at a conference. When I asked who thought that privacy was overrated I got quite a few hands. When I asked who closed the curtains at night, it gave a lot of hands. "Who will tell me his salary and contents of their bank account" gave no hands whatsoever.
They got the point then, especially when I showed them the Google Terms of Service. Chapter 11 is *perfect* to put up on the screen. I edited it so it didn't use the word Google, and nobody wanted to sign up to such a service. Then I changed to the original, and it was interesting to hear the audience reaction.
Privacy is a right. Breaking it for fighting crime should be a jealously guarded privilege, not a casually acquired capability.
"Don't fool yourself that use (sic) are the user of social networks - you are the product."
What is it with Facebooktards anyway? I have one email address used only on an anti-scam site, so it's impossible to keep spam free. I get about one invite a week to be some asshole's friend.
Be very careful to read what you write and double check before you click submit!
An assholes friend, eh? That would make you a tw....I'll get me....
Don't make assumptions. He might be a pri.. instead :)
So ... How do they make money?
Some useful reading: "Click: What We Do Online and Why It Matters" by Bill Tancer. Bit of a self-praise work as US books go, but it covers information age product well the topic.
Oh and by the way: .... "Theregister.co.uk. Relative to the overall population of internet users, the site's audience tends to be Caucasian; it also appeals more to childless, higher-income men browsing from work who have postgraduate educations. Roughly 57% of visits to this site consist of only one pageview (i.e., are bounces), and visitors to the site spend about four minutes per visit to the site and 80 seconds per pageview. Theregister.co.uk is in the “News and Media” category of internet sites."
Advertising on this site: 0.54% of the adverts result in immediate purchase.
Product sales increase from adverts on this site: 6.41%
And thats just the snippet you can get for free from Alexa...
More useful reading
Are Advertisers doing worse than the Gambling Industry or better ?
But doesn't Alexa...
Only collects data from users who have installed their toolbar?
Of course, this probably represents the segment of the population most likely to be affected by adverts, but the statistics don't represent the real world. Whatever that is.
0.54% of the adverts result in immediate purchase.
Wow, there are that many El Reg readers who haven't discovered AdBlock yet?
Re: So ... How do they make money?
"Product sales increase from adverts on this site: 6.41%"
OK, so let's dig a little deeper and ask: How do they know that? Do they have a large number of advertisers who, without changing any other part of their marketing strategy and without launching any new products, started advertising on El Reg and noticed a 6% increase on sales? Of course they didn't, but it serves everyone's purposes within the advertising profession (and that includes the marketing departments who spend their advertising budgets, just as much as the advertisers they spend it on) to believe it.
Much the same line of argument goes for Facebook data, or Google ads. You just *know* that the information is as low in quality as it is high in quantity, but you can't resist paying for it anyway. At least, that's how it seems to be if you're in marketing. I realise that a company that does no advertising will not last very long, but it does seem to me that most advertising (at least to the general public) is based on a scattergun approach rather than anything scientific.
New business opportunities...
I expect to see some start-ups offering services that attempt to retrieve a persons lost privacy OR the means to re-invent themselves with NEW privacy...
There will be many $$$$$$ in it.
Anon. of course as I value my privacy.
Face-ache, go to heck.
Facebook is 'killing privacy for commercial gain'
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