This week’s Insgragram TOS kerfuffle is nothing new. Instagram is not the problem, it’s just the latest symptom of a sick business model that has been allowed to become so dominant as to be almost un-challengeable – services on the web MUST be free, so you MUST give up your privacy and/or your intellectual property rights to enable the service providers profits. If you dare stand up for privacy then you are a greedy idiot who wants something for nothing, and you need to grow up and let the companies make money.

My problem is not that companies want to make profits, it’s their instance on selling our data to do it that I have a problem with. How about this for an idea – why not let people pay for services rather than insisting we all whore out our privacy and intellectual property?

In the past, when you wanted to set up a company you started with a business plan, and then you went out looking for the money to get your business off the ground. Before you started you knew how you were going to make money. In general, the users of your service were your customers, and you made your money by selling your service to them.

The modern ‘web2.0′ approach is different – you have an idea, you set up a free service (which you bank roll yourself or with ‘Angel’ or ‘Venture’ capital), you suck in as many users as you can, and then you sell the company to someone else and make a big profit. The whole time you are losing money hand-over-fist. The more popular your free service, the more money you lose, but the more valuable your company becomes. Although it’s ostensibly the company that is being sold, what’s really up for sale is the users – we are the cash-crop of this web2.0 business model.

Even if a free startup decides not to sell, like for example Twitter, the company still has to make the switch from losing to making money, and the way that is done is almost always by exploiting the users.

In order to make your human crop as valuable as possible you need to collect as much personal information about them and their activities as you can, and you need to get them to sign over as many of their rights to you as you can. It’s this perverse incentive that drives the massive erosion of our privacy that we are seeing at the moment.

It’s these perverse incentives that the free business model creates that I have such a problem with. As many people have said, if you are not paying for a service, then you are the product. I don’t want to be anyone’s product, I want to be their customer!

It’s true that there are non-free choices for a lot of things online. This blog is not hosted on a free service like Blogger or Tumblr because I want full control over my work, and the information I share. Instead, this blog is hosted on a server I pay for, so I am the customer. My chosen photo network is Flickr, because I can pay them for a pro account and become their customer. Similarly, I have a paid Instapaper account for managing my reading lists, and I pay to use the App.net social network.

However, the tyranny of free still hangs over me. I use many free services because I feel I have to. I have a Twitter account and a G+ account, because as a podcaster you need to be on at least SOME popular social networking sites. I’ve chosen those two over the likes of FaceBook and LinkedIn because I find their terms and practices the least worrying, but I’d still love to be able to pay for those services so they could stop selling me on to third parties to make their profit. My videos are hosted on YouTube because that’s where the community is. I’m perpetually tempted to switch to Vimeo’s paid service, but that’s not where the Irish railway nerds hang out, and YouTube’s terms are not too odious.

The tyranny of free is also spreading into applications. More and more companies are offering free apps that they then fill with ads. Thankfully there are enough companies that let you pay to remove the ads that I have only one app that I use regularly that is constantly advertising at me. When choosing apps I will always choose the paid alternative over the free add-supported one if I can.

Everyone has their limits on what they will tolerate in exchange for a free service, which is why you see so many angry responses to terms of service that push the boundaries. Unfortunately, over time all our boundaries are slowly being pushed further and further out. Had FaceBook’s TOS been what it is today on their first day, people would just not have joined, but like a frog in boiling water we have all been slowly ground down and we accept more and more without a fight.

I absolutely do not like the future we are heading towards. By exploiting our collective greed and dangling free stuff in front of our faces corporations have managed to entice our society into giving up our privacy in ways even totalitarian governments have failed to do. The Stasi would have killed for Google’s database!

It just does not have to be this way!

Some people will insist on not paying for things, and many services, particularly social networks, require a critical mass of people to become useful, so free can’t go away. However, it can co-exist with paid services. The simplest way to do this is with a so-called ‘freemium’ model. Your free users get sold to advertisers, while your paying users do not, and perhaps also get a more feature-rich service. This is how both Flickr and Instapaper work, and I’m a happy user of both services.

I’ve always hoped Twitter would go the freemium route. Imagine a world where you could pay a few Euro a month for a pro Twitter account which would enable the use of 3rd party apps free of silly limitations. The reason Twitter are hell-bent on destroying the 3rd party apps that made their service a success is that they need control of the user experience so they can sell their users to advertisers. Why not let the users who want apps pay for the use of the service instead!?

Another very interesting development is App.net, this is a completely paid social network. There are no free App.net accounts, which makes it an exceptionally brave move on their part. I’m really hoping it takes off and proves that there are alternatives to free, even in the social networking space. Because App.net was a paid service from day 1 they did not anger anyone by having to transition from a free loss-maker to a paid profit maker.

I say it’s time to stand up and demand to be allowed to pay for services. Each time someone puts up the straw-man that we HAVE to give up our privacy and intellectual property because a service is free, knock it down with the simple alternative that we be allowed pay for the service.

Let us become customers, I’m fed up of being the product!