An interesting article about MoviePass was recently published in the NY Times. MoviePass, for those not familiar, is a subscription service for going to the cinema. It has been around a few years, since 2011. Its original offering was priced at $50 a month, later reduced to $35. Its current offering is now a somewhat unbelievable $9.95 a month, which allows each subscriber to attend one movie a day.
The service operates outside of the movie theater chains. It uses a type of debit card that loads the value of the movie once you activate your MoviePass app – so to the theaters it just looks like any other debit card transaction. You can pretty much watch whatever film you want; you aren’t stuck with second-run or bad films, or a specific chain.
It certainly seems like an unbelievable deal for consumers. In the extreme case, for $9.95 you could attend 31 movies in a month. Assuming an average value of a movie ticket of about $9 (yes, I know it’s much higher in many metro areas, but that’s the national average per the National Association of Theater Owners), a subscriber could thus get $279 in movie value for their $9.95 monthly investment – an ROI of 28 to 1!
According to the article, the CEO of MoviePass “believes that ticketing can at least be a break-even business for MoviePass. The real treasure in this venture, he contends, is the trove of data about consumer tastes and habits that MoviePass can collect”. He believes the combination of fees and income from data sales can make this venture work.
What do the Green Bay Packers have to do with this?
The NFL and its teams are famously tight-lipped on the finances of the league and the teams. However, the Packers are owned by the community through shares. The shares really give fans little value, but like any other shareholder business, the Packers have to publish financial reports. Thus, the world finds out much of the otherwise secret financial dealings of the NFL with their TV partners, etc.
In the same vein, we sometimes can get a window into the black box of value of digital data in situations such as this with MoviePass. Now, it could be MoviePass is blowing smoke and trying to cover up a ridiculous burn rate. But if we take them at face value, it provides us with an opportunity to make a guess as to what our personal data are worth in this particular situation.
Let’s make some assumptions
Now, as the article rightly points out, a subscription model is built on the fact that few subscribers will ever make use of the total value of their subscription – some may never make use of it, and many will make infrequent use of it. Thus for the sake of argument, let’s be conservative and say only half of MoviePass subs ever use the service each month, and those who do only attend three movies a month. This would mean the average MoviePass sub attends 1.5 movies a month, putting an average monthly subscriber cost to MoviePass of $15 ($13.50 in tickets plus assume $1.50 in overhead) against a subscription of $10. If MoviePass expects to break even, then this would imply a $5 value of each subscriber’s data each month. (Please note that I have no inside information – I’m just making some educated guesses on all the above)
And there you have it, the value of your data in one particular category (movie attendance tied to your demos, overall movie viewing behaviors, and whatever other data could be appended or tied to your profile) for a particular set of clients (movie studios and theater chains) can be guesstimated to be roughly $5 a month.
Let’s do some math
We’ll go a bit further and assume that many apps we use have a similar value proposition – and some multiplied due to the wider range of potential categories and end clients. A quick look through my phone and I see Facebook, Google, LinkedIn, Twitter, Weather Channel, Fandango, Amazon, a parking app, Realtor, FiOS, The Economist, and many others. That’s a lot of apps collecting, and likely selling on, data about me. The point here is not if $5 per app per month is a correct estimate; even if it’s a few dollars off either way, the point is that the value of our personal data is a non-trivial number when summed up over the dozens of apps and websites we use each month.
Many apps/services will make the argument that the value to the consumer of their service is in excess of what they make from consumer data. This is similar to the ad-supported media argument that ads pay for your content. But a key difference here is that the assumption in the digital world is that the digital firms own your data from the start – consumers never have an opportunity to trade on the value of their data; you either sign it over via Terms of Service/opt-in or you don’t get to use the app at all. And also that the data can take on a life of their own, being sold on to or used by many advertising technology businesses that operate in the background of the digital ad ecosystem.
Whose data is it?
The EU is taking steps to address this through the General Data Protection Regulation (GDPR) that will be enforced as of May 2018; the GDPR is intended to provide for a high level of protection of personal data and to give citizens back control over of their personal data. In the US, some consumer advocacy and consumer privacy groups are also pursuing such a flip in rights in order to provide relief to consumers whose data are being bought and sold along the digital food chain without any transparency to the consumers themselves.
That is unlikely to happen quickly in the US, although EU rules may nudge things along if digital companies want to standardize globally. Or, just as with car emissions, a large state like California could drive the US discussion. As for we consumers, there isn’t a lot to do on an individual level other than to be more aware of which app/website is tracking what. And think about if an app/website is offering $5 more in value than you’re paying for it.
David Tice is the principal of TiceVision LLC, a media research consultancy.
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