A long and interesting article. I'm only taking bits from it:
Ron Carlsons short story What We Wanted To Do takes the form of an apology from a villager who failed to protect his comrades from marauding Visigoths. It begins:
"What we wanted to do was spill boiling oil onto the heads of our enemies as they attempted to bang down the gates of our village. But as everyone now knows, we had some problems, primarily technical problems, that prevented us from doing what we wanted to do the way we had hoped to do it. What were asking for today is another chance."
I use the first personal plural advisedly. From 1994 to 1999, I worked for Tripod.com, helping to architect, design, and implement a website that marketed content and services to recent college graduates. When that business failed to catch on, we became a webpage-hosting provider and proto-social network. Over the course of five years, we tried dozens of revenue models, printing out shiny new business plans to sell each one. Wed run as a subscription service! Take a share of revenue when our users bought mutual funds after reading our investment advice! Get paid to bundle a magazine with textbook publishers! Sell T-shirts and other branded merch!
Think of it as an advertising future, or perhaps the worlds most targeted ad.
At the end of the day, the business model that got us funded was advertising. The model that got us acquired was analyzing users personal homepages so we could better target ads to them. Along the way, we ended up creating one of the most hated tools in the advertisers toolkit: the pop-up ad. It was a way to associate an ad with a users page without putting it directly on the page, which advertisers worried would imply an association between their brand and the pages content. Specifically, we came up with it when a major car company freaked out that theyd bought a banner ad on a page that celebrated anal sex. I wrote the code to launch the window and run an ad in it. Im sorry. Our intentions were good.
Cegłowskis speech explains why Tripods story sounds familiar. Advertising became the default business model on the web, the entire economic foundation of our industry, because it was the easiest model for a web startup to implement, and the easiest to market to investors.Web startups could contract their revenue growth to an ad network and focus on building an audience. If revenues were insufficient to cover the costs of providing the content or service, it didn't matterwhat mattered was audience growth, as a site with tens of millions of loyal users would surely find a way to generate revenue.
The key part of investor storytime is persuading investors that your ads will be worth more than everyone elses ads. Thats because most online ads arent worth very much. As a rule, the ads that are worth the most money are those that appear when youre ready to make a purchasethe ads that appear on Google when youre searching for a new car or for someone to repair your roof can be sold for dollars per click because advertisers know youre already interested in the services they are offering and that youre likely to make an expensive purchase. But most online advertising doesnt follow your interest; it competes for your attention. Its a barrier you have to overcome (minimizing windows, clicking it out of the way, ignoring it) to get to the article or interaction you want.
Once weve assumed that advertising is the default model to support the Internet, the next step is obvious: We need more data so we can make our targeted ads appear to be more effective. Cegłowski explains, Were addicted to big data not because its effective now, but because we need it to tell better stories. So we build businesses that promise investors that advertising will be more invasive, ubiquitous, and targeted and that we will collect more data about our users and their behavior.
I have come to believe that advertising is the original sin of the web. The fallen state of our Internet is a direct, if unintentional, consequence of choosing advertising as the default model to support online content and services. Through successive rounds of innovation and investor storytime, weve trained Internet users to expect that everything they say and do online will be aggregated into profiles (which they cannot review, challenge, or change) that shape both what ads and what content they see. Outrage over experimental manipulation of these profiles by social networks and dating companies has led to heated debates amongst the technologically savvy, but hasnt shrunk the user bases of these services, as users now accept that this sort of manipulation is an integral part of the online experience.
What I wanted to do was to build a tool that allowed everyone to have the opportunity to express themselves and be heard from anywhere from a few friends to the entire globe. In 1995, there werent a lot of ways to offer people free webpage hosting and make money. Charging users for the service would have blocked most of our potential customersmost of the world still doesnt have a credit card today, and fewer did in 1995. E-payment systems like PayPal didnt come online until 1999. But because Tripods services were free and ad supported, users around the world found us and began posting webpages they could not host elsewhere.
The great benefit of an ad supported web is that its a web open to everyone. It supports free riders well, which has been key in opening the web to young people and those in the developing world. Ad support makes it very easy for users to try before they buy, eliminating the hard parts of the sales cycle, and allowing services like Twitter, Facebook, and Weibo to scale to hundreds of millions of users at an unprecedented rate. This, in turn has powerful network effects: Once all your high school classmates are on Facebook, theres a strong temptation to join, even if you dont like the terms of service, as its an efficient way to keep in touch with that social circle.
An ad supported web grows quickly and is open to those who cant or wont pay. But it has at least four downsides as a default business model.
First, while advertising without surveillance is possibleunverifiable advertising was the only type of advertising through most of the 20th centuryits hard to imagine online advertising without surveillance. The primary benefit of online advertising is the ability to see whos looking at an ad. Simply paying for online advertising requires surveillance, if only to eliminate clickfraud. And if Cegłowskis theory is true, theres no apparent escape from escalating surveillance to create more attractive business propositions.
Second, not only does advertising lead to surveillance through the investor storytime mechanism, it creates incentives to produce and share content that generates pageviews and mouse clicks, but little thoughtful engagement. ....
Third, the advertising model tends to centralize the web. Advertisers are desperate to reach large audiences as the reach of any individual channel shrinks....
Finally, even attempts to mitigate advertisings downsides have consequences. To compensate us for our experience of continual surveillance, many websites promise personalization of content to match our interests and tastes.
More importantly, Cegłowski offers us a way forward through his own actions. Cegłowski wrote and maintains Pinboard.in, a simple and powerful bookmarking service with an unusual business model. Each user of the service pays a one-time fee, which rises a fraction of a cent with each new user. (When I signed up for Pinboard, it cost $5, and now costs a bit more than $10.) The cost has the benefit of keeping the service spam-freeMetafilter has seen some of the same benefits from their nominal membership feeand has meant that the service has been profitable since it was launched. Users can upgrade to a $25-per-year version that archives every webpage you bookmark, creating a permanent, searchable archive of your journeys through the web. Cegłowski promises that he will never sell ads on the site and never sell data to third parties, reminding us, If youre not paying for your bookmarking, then someone else is, and their interests may not be aligned with yours.
One simple way forward is to charge for services and protect users privacy, as Cegłowski is doing with Pinboard. What would it cost to subscribe to an ad-free Facebook and receive a verifiable promise that your content and metadata wasnt being resold, and would be deleted within a fixed window? Google now does this with its enterprise and educational email tools, promising paying users that their email is now exempt from the creepy content-based ad targeting that characterizes its free product. Would Google allow users to may a modest subscription fee and opt out of this obvious, heavy-handed surveillance?
