Ello’s promise is that it will not make money from selling ads or user data. The anti-Facebook social network launched last year with these promises; to make these even tighter, ir converted its legal structure to a Public Benefits Corporation. This means that Ello is a for-profit organization, but an essential part of its philosophy to benefit society. The company sees money and profit as a means to make social impact. Ello wants to provide users the opportunity to connect without other companies seeing them as products that can be bought and sold. According to Ello Doesn’t Have Ads, “Collecting and selling your personal information, reading your posts, and mapping your social connections for profit is unethical. Every new feature on an ad-driven network is either a new way to gather more data about you (which can be sold), or show you more ads (which are auctioned), or both.” Thus, Ello’s motto is to do the right thing by making the product beneficial to users themselves, not to other companies. In this way, we see a company reflecting what care ethics is about.
Without advertising, the company says it will make money out of premium extra features, like profile customization. This model is not new and, in some cases, it has proven to be profitable. As a matter of fact, it’s widely used in the gaming industry, known as the “freemium model,” in which users play for free, but pay for extras. The concept is if you want to get the best rewards or features, you have to pay money; users pay to enhance the experience. Clash of Clans and Game of War: Fire Age made enough money last year to buy Super Bowl ads. Sounds good, right? It’s important to note that only 1.5% of freemium revenue comes from these purchases. Also, this model doesn’t mean that these apps are free from advertising. As a matter of fact, according to a survey by App Annie and IDC on 2013, 50% of app revenue comes from in-app advertising and that percentage is expected to increase in 2017. There are two possible scenarios regarding data mining here:
- It doesn’t mean that no one is using data; it’s used internally to enhance user experience
- With the information above, we see the success of the gaming apps does imply using advertising as an important source of revenue, thus user data is sold.
In my opinion, this model might work for gaming, but not for social, especially if the social network offering an ad-free experience has no attractive features and functionalities that may motivate me to try it or even consider leaving Facebook because that one is better. In order for Ello to profit from the extras, it needs to increase its user base. As of October, they had 1 million users, to which they just added 250,000 more. The rollout has been limited because the platform is unfinished and they have decided to add features along the way. They have missed a very important thing, if not the most: the app version. Considering the growth of mobile usage, how come they leave this for 8 months after launching?
Just recently, Ello added the ability to post videos from other sources like YouTube. In Ello Is Becoming a Real Social Network, Even as Tech Media Pronounces It Dead, John Koetsier touches on this point by saying that this new ability to share video does include ads, not from Ello, but from YouTube. I wonder what platforms like YouTube and Soundcloud will be able to do regarding advertising, considering the fact that they will be able to know where traffic comes from. Technically, Ello is not selling information, but it’s providing an open forum for others to take data from there. Ello was able to tackle this with a feature on the settings menu, which you can turn off to avoid embedded media.
I think at this point, this limits the user’s ability to connect organically; to create and celebrate life just like Ello wants. It’s a cool option and it strengthens their position about no ads, but then it’s also a barrier for sharing information. If I’m an artist and want to share my video from YouTube with my friends, then it means not everyone will see them. What will happen when people are able to use hashtags? Doesn’t this give outside sources access to content related to a hashtag? I wonder up to what point can they keep this promise, when content like hashtags are part of a universal database.
I honestly love Ello’s philosophy and I like the intention of creating a company with a sustainable model that wants to do social good by intending to protect people and providing a platform strictly for connecting with other people, not products. The freemium model they expect to use for added features and customization sounds like a great idea, but why will people pay for something that they can have for free in the platform which billions of people use? In order to capitalize on this, they must focus on what’s different and try to make it really different. If there is the equivalent of a newsfeed, what feature does my product have that makes me different? Snapchat and Instagram did this. They both have feeds, but Snapchat decided to erase content and Instagram decided to stick to enhancing the photo sharing process. It’s a matter of differentiation…..and launching the app as soon as possible. As soon as they are able to increase its user base, we will be able to see if these promises also result in a sustainable company.
I think people will react positively, just like me, initially. I loved the idea and the concept, but once I got a chance to play with the platform, I couldn’t find anything interesting or too different, so I never used it. Also, it will take a while to see if there will be consequences for all social media, but I can say it makes me think about Path, another social network which tried to deliver a similar ad-free promise to protect privacy, but with a price people were not willing to pay. I think there is a fine line between protecting and not protecting users on social media. They’re all businesses and they need to make money, sometimes sacrificing what they initially say they will protect.