We Need New Business Models in IoD

September 14, 2014

About a 3 min. read

Today, I gave a talk at the Ubiquitous Computing conference’s Workshop on Usable Privacy & Security for wearable and domestic ubIquitous DEvices (UPSIDE), modestly titled “Augmented Reality + Internet of Devices + Big Data: The End of Privacy?” I’ll post something else about this talk soon, but one of the goals was

to urge people to develop architectures for IoDRutledge, R. L., Massey, A. K., Antón, A. I., & Swire, P. (2014). Defining the Internet of Devices: Privacy and Security Implications (GVU Technical Report GIT-GVU-14-01). Georgia Institute of Technology. This paper introduces the idea of Internet of Devices (IoD), a term I like more than Internet of Things + AR that allow us to keep and control our data, sharing it or not as we see fit.  It may be that we choose to keep all our data local, or only share anonymous or agregated data.

The problem with this goal, of course, is that some days it seems like the principle business model of tech companies right now is centered on the idea of giving things away and mining user data.  If we cut the cord to user data, what then of these services that folks have grown to love and expect to be free?

I think there is an opportunity to create new business models that reflect this expectation of “free,” but that actually result in direct revenue.  Looking to the games industry, the “free to play” model has succeeded because they have figured out how to generate income from players at those moments when the players see value — if I have more coins/eggs/whatever, I could do “something” in the game.  Designers of F2P games have figured out how to walk the line of making games that are (at least somewhat) fun to play for free, but where spending real money adds enough value that people will happily fork it over.  And they do fork it over, in often disturbing amounts.

This model won’t translate directly, of course. Many games leverage the same compulsions as casinos and other forms of gambling, withholding “fun” at just the moments it’s most tantalizing and then requiring players to spend “just a little bit” to keep playing.  It’s hard to imagine this model translating directly to a more mundane context, but the higher level point that people have demonstrated they will “paying a tiny amount at the moment when the user perceives real, tangible value” should translate.

To make this work, we’ll need a way to pay these small amounts.  In games, users buy “coins”, usually in bulk so they are easy to spend in the heat of the moment. (Those coins can typically also be “earned” in the game, giving users the illusion they could successfully play for free.)   Micro-transaction schemes haven’t worked well in the past, but if they can be smoothly integrated into an IoD context, there is enormous potential.  Given the appearance of systems to control these collections of devices (HomeKit, Thread,  and Allseen, to name a few), and the tie-in between these systems and existing payment infrastructures, the potential is certainly there.

We Need New Business Models in IoD - September 14, 2014 - Blair MacIntyre