1 week ago for day 53, 2021 with 326 words.

Business models

So what makes the difference between good and bad software? It all starts with incentives. Software makers should ask themselves if their incentives are aligned with those of the users. For a lot of the modern day apps, the incentives are fundamentally misaligned.

Business model

Misalignment starts with the business model.

When it comes to software, free is... well, complicated. When your business is advertising, your marching orders are to connect more people and maximize the time spent on your app. The incentives between the companies and the people that want to use the app are fundamentally misaligned.

And even when you don’t show ads ‘free’ apps can make money. The other way to monetize ‘free’ apps is with data. Personal information about users is valuable, especially if it says something about consumer behavior or political attitudes.

Instagram benefits from you spending as much time as possible in their app. If you scroll through Instagram, every tab will give the company more information about you, which ultimately leads to more money into the pockets of the company and its shareholders. Everything on Instagram is ultimately designed to lure you into more swiping, more scrolling, and more liking.

[1](That doesn’t mean I want to disregard advertising and data as a business model. Advertising on the internet has allowed millions of small businesses reach new audiences. On top of that billions of people rely on useful services that are provided for free. These wouldn’t be able to exist without advertising. The problems remains that advertising is designed to maximize people’s attention and we should all be aware of when that relation is suitable.)

Subscriptions on the other hand are easy.

You pay, the company delivers. It can't be clearer than that. If you don't like the product you quit your subscription. Headspace benefits financially from you making mindfulness part of your daily routine, because they monetize through subscriptions. If they fail to do that, they will probably lose you as a customer. This positive alignment is powerful. It is in Headspace best interest to do everything it can, to stimulate you towards the positive act of meditation.

Alignment between a company and its users starts with a healthy business model. A business model where parties agree on the mechanics of the transaction and where incentives aren’t hidden behind difficult third party

dreamer

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By Kent de Bruin

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