Give Away Your Digital Services: Leveraging Big Data to Capture Value

Consumers are getting used to receiving free services in many different fields, and the popularity of the mobile app industry is feeding this phenomenon. Historically, advertising—a typical two-sided market mechanism—is the primary method that companies relying on a free-to-consumers business model have used to appropriate value in digital environ- ments. But new strategies are needed to make free services sustainable and profitable in the long term. At the same time, companies are gathering a huge amount of data from consumers, especially through mobile apps, by leveraging the sensors embedded in smartphones; this data represents a powerful new source of value. Through a case study analysis, we show how leveraging a two-sided structure can enable companies to capture value from user-sourced data, enabling a sustainable free-to-consumers business model. In this model, users are more than eyeballs to be targeted with advertising; they become data providers, and companies may capture value by using that data to customize advertising messages, lever- age e-ethnography to improve their own core offer, serve as fodder for research, or create knowledge for third parties