Are privacy concerns killing the mobile location-based services market?

Location-sharing Market Growth

The latest Pew report on mobile behavior offered one fascinating contrast. Video calling on mobile phones is finally going mainstream, with usage increasing from 7% of cell phone owners in 2010 to 21% in 2013. But growth in location-sharing is fizzling badly, increasing from 5% in 2011 to just 8% in 2013. The difference in growth between these two types of services is pretty stunning, particularly when you consider how much hype there was around location-sharing services back in 2011. What I find mesmerizing is the differences between various income levels.

Video calling grows in popularity the more money consumers make — it is used by 16% of people making less than $30,000 and by 29% of people making more than $75,000. Nearly all advanced mobile services follow this pattern; usage increases the more sophisticated the consumers get. But this is not what is happening with location-sharing services. Those services are used by 9% of people making less than $30,000, and just 7% of people making more than $75,000.

This inversion is rare for a novel mobile technology. The more affluent and educated the consumers are, the less likely they are to use location-based services. 10% of phone owners without high school diplomas are into location-sharing — but just 7% of college educated phone owners use related services.

This would seem to imply that something about location-sharing becomes the more repellent the more education you possess. The most likely issue here is privacy. Educated Americans are more likely to fret about the implications of sharing their location data.

This could turn out to be a real, long-term headache for the entire mobile location service industry. Affluent American consumers are scared of sharing location data and unless that changes, the services are not going to be able to flourish.

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