How Much is Smartphone App Privacy Worth? $5+ Per App

Smartphone users will happily pay more than $5 for an app in order to keep their privacy, according to a new study. The economists running the study presented users with a real, free app and a number of identical-functionality “competitors” that cost money. The difference? The paid apps came with varying degrees of privacy protection — not looking at browser history or tracking location, for example.

The study looked at spend on a feature-by-feature basis. But adding up what people were willing to spend to get rid of the privacy-compromising features in the average app, the total was more than $5. Which is definitely way more than the cents-per-download the average free app brings in.

And, which begs the question… how much would you pay for enough gasoline to hold a ‘privacy bonfire’?

“A new study from economists at the University of Colorado finds otherwise. It shows that the average consumer would prefer to pay small fees for their apps, in exchange for keeping their information private and their screens uncluttered.

In their study, Scott J. Savage and Donald M. Waldman surveyed 1,700 smartphone users, presenting them with a set of apps they could purchase. One of the apps was a real, free app, currently available in the iTunes and Google Play stores. Five other apps were also suggested, and were said to have exactly the same functionality as the free app. But these five came with varying levels of privacy and advertising protections (some protected location data, others address book contents, and so on), and all had a price tag.

What Savage and Waldman found is that consumers were willing to spend a bit more to keep their data to themselves, and just how much depended on which data were at stake. For example, 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.

Because the “average” app (as determined from a sample of more than 15,000 Android apps) has both advertising and access to a person’s location and their phone’s ID, Savage and Waldman say that paid versions of such apps could rake in somewhere around $5 per download. That’s way, way more than the pocket change that most free apps bring in per download.

What’s more, Savage and Waldman use that $5 figure and to do some back-of-the-envelope figuring: Given that the average consumer in their study has 23 apps, and given how many smartphone users there are in the U.S., they calculated the total amount that consumers would spend, if only the apps were there for them to buy: $16 billion. And that’s the conservative, lower-bound estimate.”

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