To Support User Privacy, Path Eschews Advertising Revenue

CEO and co-founder Dave Morin acknowledged that Path had experienced some stumbles related to user privacy, but said the company continues to focus on building a social network that supports privacy and refuses to monetize user data.

CEO and co-founder Dave Morin acknowledged that Path had experienced some stumbles related to user privacy, but said the company continues to focus on building a social network that supports privacy and refuses to monetize user data.

The mobile-only social network will not turn to advertising to establish a revenue model, Morin said late Friday at South by Southwest.

“From the beginning, we’ve had a very strong opinion about how we want to make money. The real thing we believe is if users don’t understand how you make money, there’s a problem. The way we think of our business model is that we want to sell things directly to users,” he said

Path’s launch yesterday of stickers, or custom emoticons, has put the company closer to a viable revenue model that doesn’t rely on advertising. In the first 24 hours, stickers brought in more revenue than Path’s previous in-app purchase, photo filters, did in an entire year, according to Morin.

Path has billed itself as a more private social network than Facebook, but it has met with its share of controversy over its handling of user data. Just over a year ago, users and privacy advocates squawked when it was revealed that Path was uploading their mobile address books without asking for permission. Last month, it paid an $800,000 fine stemming from the Federal Trade Commission’s investigation of the practice.

Morin insisted, however, that Path handled contact data in an “industry-standard way.” (Indeed, the fine stemmed from uploads of personal information from several minors who were allowed to sign up for the service despite a professed ban.)

The address books were accessed in order to provide users with a list of their contacts who were also on Path. Users had failed to understand that the matching they saw in the app necessitated Path uploading the data to its own servers, according to Morin.

“This was sort of an education issue with us,” Morin said.

Just last month, Path stumbled again, as a developer revealed that Path had uploaded his location without his permission, using the metadata of a photo he shared on the network.

Privacy is an area so loaded with “landmines,” Morin said, that other entrepreneurs frequently ask him why he even bothers to try to build privacy into Path.

“We keep having to talk about [privacy], but that’s a good place to be,” he said.

The social network’s limit of a users social connections to 150 has been criticized as an imposition on users with no substantive effect on privacy. But Morin defended it.

“What that does at network scale is create a network that’s a lot more intimate,” Morin said.

Unlike Twitter and Facebook, Path sees more usage at night and on the weekend, indicating that users see it as a part of their personal, rather than professional, identities. As a secondary effect, the friend cap also effectively bars brands from the platform.

Path also limits tagging and other information streams to ensure that users never “lose control” of their own content.

The company is betting that more and more users will turn to social platforms where marketers don’t eavesdrop on their private conversations.

Users are already beginning to experience social fatigue, accounting for the popularity of products like Snapchat, he said.

The real test for apps like Path will be whether users shy away from Facebook as it employs their data more and more explicitly for marketing purposes. In January, the company turned on Graph Search, which makes users’ information searchable and turns every like and check-in into a potential endorsement. Last month, it announced it would support advertising to users targeted using the controversial practices of data brokers. And shortly thereafter, it announced it would acquire the ad network Atlas.