I remember setting up our first website. That was 20 years ago, in 1994. When the Web was very young and there were only a handful of websites, it was easy to forecast that the Web was going to grow. And indeed, during these past 20 years, it has exploded in size. What’s even more important, the Web brought normal everyday people online. Before the Web, you would only find geeks and nerds online. Now everybody is online.
Back in 1994, we were guessing what would fuel the upcoming growth of the Web. For it to grow, there has to be online content—content like news or entertainment. And for news and entertainment to move online, somebody has to pay for it. How would users pay for online content? We had no idea. Maybe newspapers would start charging an annual online subscription fee, just like they did for their paper version? Or maybe the web would incorporate some kind of an online on-demand payment system; the user would have an easy way of doing in-browser micropayments in order to access content. This would enable the user pay, say, one cent to read today’s Dilbert cartoon.
As we know now, such a micropayment system never happened—even though it looked like such an obvious thing 20 years ago. Instead, a completely different way of paying for online content surfaced: ads. I remember seeing the first banner ad on a website, maybe in 1995 or 1996. I chuckled at the idea of a company paying money for showing their ad on someone else’s website. I should not have chuckled; that same idea now fuels almost all of the content online. And highly efficient ad profiling engines create practically all the profit for companies like Google and Facebook.
Google is a particularly good example of just how profitable user profiling can be. Its services — like Search, Youtube, Maps and Gmail — are free. You don’t pay a cent for using them. These services are massively expensive to run: Google’s electricity bill alone is more than $100 million a year. You would think that a company that runs very expensive services but doesn’t charge for them would be making losses — but it isn’t. In 2013, Google’s revenue was $60 billion. And their profit was $12 billion. So, if we make a modest estimate that Google has one billion users, every user made 12 dollars of profit for Google last year — without paying a cent.
Frankly, I’d be happy to pay Google $12 a year to use their services without tracking or profiling. Heck, I would be ready to pay $100 a year! But they don’t give me that option. We — the users — are more valuable in the long run by having our data and our actions profiled and saved.
Of course, Google is a business. And they are doing nothing illegal by profiling us—we volunteer our data to them. And their services are great. But sometimes I wish things would have turned out otherwise and we would have a simple micropayment system to pay for content and services. Now, with the rise of cryptocurrencies, that might eventually become a reality.