Who really owns a digital company?

Fjord Family

I’ve been wondering for a few days / weeks now what the end result of Instagram’s rather big faux-pas in December 2012 would be, when they rather ham-fistedly announced changes to their terms and conditions, only to be globally flamed by their user base and be forced to issue statements about how it wasn’t really as major as it sounded…

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Now it’s suggested that the number of daily users of Instagram has dropped by half: down to 7.81 million from 16.35 million on 17th December 2012, when the change to terms and conditions was announced. Obviously Instagram are denying, but it’s hard to imagine that something like this has not happened.

Pretty shocking.

I’ve been in two minds about this ever since then, as a relatively loyal Instagram user who decided to stick around.

On the one hand, we’re whining about changes to terms and conditions of a company whose services we don’t pay for, and which we’re prepared to use to either build our own social profiles, or even support our brand strategy (in the case of commercial entities, anyway). Why are we whining when we’re not even paying for something? Do we really feel like something like this should be entirely free when somewhere there’s a data centre with our stuff on it, consuming resources? Are we really surprised after Facebook’s acquisition that terms and conditions will change?

But on the other hand, there’s something important happening here. Suddenly, as we subscribe to more and more digital services, we’re really becoming ‘shareholders’, whether we’re comfortable with that term or not. As a user, our subscription (paid or free) is worth something – maybe a valuation, maybe advertising spend, maybe general kudos. By withdrawing it, we’re making a statement. By going dormant, we’re making a statement.

In Instagram’s case, it’s a massive two fingers to their new terms and conditions, which (if they hadn’t already been acquired) would have caused them serious problems. As it is, it’s probably already causing headaches because it will be making the Facebook execs worry even more about mobile strategy.

Decades ago in Britain, Margaret Thatcher ushered in a new era of public ownership, with massive flotations and lots of highly public debate about everyday people owning shares. When you look at the numbers (as pointed out in Andrew Marr’s rather excellent History of Modern Britain), very few people in Britain actually own shares – it’s become something institutional (pension funds) or a way of making cash quickly (building society flotations in the 1990s).

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But today’s digital economy is actually characterised by shareholder activism on a massive scale, through our digital power as subscribers. Nobody calls it that, and it sounds kind of anachronistic, but make no mistake, that’s what’s happening. Wherever we take our subscription, money flows along with it (adverts, valuations, upsell).

And the really powerful thing? It’s massively quick. A company like HMV can struggle on for years, watching the numbers as they decline, reflecting the general shift around us across society and not really being able to keep up. And now, companies get instantaneous feedback the minute they announce something, or (which perhaps is the more sinister side to it) as soon as a rumour develops.

Digital companies pivot fast, innovate, change their approach extremely quickly in response to what we as subscribers actually do. It’s a new enlightened age where millions of people now have a voice, and companies actually listen. At best, it can lead to optimal business models and real alignment to people’s needs; at worst it can sink a company within hours.

(With thanks to Matt Shannon, design consultant at Fjord London, and Martin Charlier, service designer also at Fjord London for being a sounding board for this piece, and for contributing their thoughts.)

Fjord Family

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