Measuring consumer well-being from using free-of-charge digital services. The case of navigation apps

Abstract

The number of active users of digital maps and navigation applications has exceeded a billion worldwide. As these apps are predominantly free of charge, their contribution to consumer well-being cannot be measured using common economic indicators, like GDP. The present study measures, in an economically consistent way, consumer surplus from a navigation service. The preferences for the navigation service and two optional location-based functionalities: traffic information and commercial information are elicited in a discrete choice experiment. In the experiment, respondents are confronted with a range of location-sharing arrangements set by a navigation provider of varying intrusiveness regarding privacy. Median consumer surplus from using satellite-only navigation without location-based functionalities is estimated at EUR 8.06 per month. Adding location-based services increases this gain by 36% to EUR 10.98, provided that data sharing is arranged on non-intrusive, user-centric terms. Both location-sharing conditions set by providers and privacy concerns of users affect the surplus size gained from using free navigation applications.