January 16, 2014
In the past seven years since the iPhone was introduced, consumers have enjoyed free apps in exchange for their data being sold to marketers. However, a new study shows that the average consumer would rather pay a small price for their apps to keep their personal information private. A study by economists at the University of Colorado found that consumers were willing to spend a little more on apps to protect their personal data, and this amount is determined on the amount of data at stake.
According to The Atlantic, economists Scott J. Savage and Donald M. Waldman gave 1,700 smartphone users a survey featuring various apps. One of the apps was a free app that actually exists in the Google Play and iTunes stores, and the other five apps had the same functionality, but came with different levels of advertising and privacy protections at a price. For example, some of these paid apps protected address book contents, and others protected location data.
The economists found that smartphone users were willing to spend more on an app to protect their personal information, depending on what data is at stake.
“On average, consumers were willing to spend $2.28 for an app that would not read their browser history; $4.05 for an app that would not have access to their contacts; $1.19 for an app that did not track their location; $1.75 for an app that did not obtain their phone’s ID number; $3.58 to prevent an app from having access to the contents of their text messages; and $2.12 for an app that had no advertising,” reports The Atlantic.
Based on these numbers, Savage and Waldman determined that paid version of apps that protect consumers from giving out their personal data could charge $5 per download, which would generate much more revenue than is currently earned by the free apps.