How the web has doomed itself
The big problem with the internet’s business model is… the internet’s business model
Remember the free internet? Most people do. Because it keeps coming back. From Tim Berners-Lee’s altruistic decision to make his code open to all, to the early proto-hippy days of The Well; from Napster’s sharing shenanigans to just-sign-up Hotmail; from the days when Facebook didn’t have advertising to, well, ditto for Twitter. And let’s not mention the halcyon days before mandatory pre-roll video advertising.
“Content wants to be free”, ran one particularly wobbly statement of online philosophy a short while ago. Well, whether it did or not that’s the way it ended up. Content became effectively free, even if those giving it away didn’t actually own that content in the first place. Some money has been scraped back of late, even if it’s too little too late, thanks to advertising.
But now we’re facing adblockalypse, if you believe many of the industry’s more excitable experts. All commercial life online will be wiped out by those pesky consumers and their technological anti-profit gadgets. “Why would they do this to us?” they gasp. “Don’t they realise it’s ruining our business model?”
Er, no. They didn’t do this to you. You did it to yourselves. Because the internet’s business model, almost uniquely, has always been to put the product out there first, whether you own it or not, then try to think of a way to monetise it. Grab that market share with a freebie, then scratch your head trying to find a way to make it pay the rent.
There’s been a flood of OPM (aka Other People’s Money) funding online businesses for a long time now. Those VCs chasing the next big thing, all busily hunting unicorns and other mythical creatures, have pumped cash into unsustainable businesses on the principle that sooner or later the money will magically arrive once the customer base is big enough.
In what other industry is this sound practice? Does General Motors give away cars with only the haziest idea of how this might benefit them in the future? Does British Airways let you travel long-haul for nothing, because it thinks that at some time in the future it might be able to charge you for in-flight sandwiches? Would Whole Foods Market suddenly pivot from unprofitable organic avocados into equally loss-making washing machine repairs yet claim it as an industry-standard success story?
But online, simple commercial logic seems to get drowned in the flood of OPM. And the consumer is, of course, delighted. As every shiny new online thing appears it’s made available for absolutely nothing in a grab at user numbers, and remains resolutely free for ages thereafter.
Consumers like this. Who wouldn’t? And they get used to this no-money-down model. But when the inevitable happens (if the site hasn’t run out of OPM and disintegrated) and they start being asked, in some way, to pay, they resent it. Of course they do. Everybody likes being given something for nothing, but hates it being taken away once they’re used to having it.
However, just as technology takes away freedom, technology gives it back. Confession: I run an adblocker on my browser. AdBlock Plus works just fine and makes the internet a much nicer place to look at. Ghostery prevents all my clicks being transmitted and saved who knows where. Yes, I’m the consumer from hell. Deal with it.
Because I can remember when everything on the the internet was free. Just like everybody can. And why wouldn’t you want to keep it that way? Everybody would. Except, of course, all those online operations that don’t feel making a profit is important for the first few years because, hey, OPM.
Is there an alternative business model that involves making money from day one? Of course there is. It’s a bit boring and traditional and not very cool and ‘digital’ but it’s got to be the future online. Because unless we get a grip this permanent race towards value-free content it’ll take down not only the current generation of online businesses but many others offline too.
Way back when, a cabal of idiots dropped the ball on micropayments, which would have made perfect sense. Now we’re struggling to find anything except horrible, and now ignorable, banner ads and pop-ups. Has anybody got any other funding ideas? Apart, of course, from OPM…