Why The Internet Distracts You
[Author’s note: This post is a chapter of my forthcoming book
RESET: Building Purpose in the Age of Digital Distraction]
Chapter Four: Mad(der) Men
Who is paying for the internet?
“Someone once said ‘Follow the Money’ and that is what it is all about.”
Murray Walker, British Journalist and Commentator
Why do I feel so addicted to my screens? What is driving the rapid growth of the digital world? How are people funding these vast efforts to build infrastructure and companies?
Asking these questions is the last step in Part I. The surprising answers will help us understand why we are being betrayed by our educational system, social impulses, and consumer technologies. In each case, the gigantic disconnect between expectations and reality comes down to one thing: money.
The digital world has humble beginnings, believe it or not. This global experiment began as a cluster of government-funded research networks. Some really smart government scientists in the U.S. and Europe needed to talk to one another across a variety of networks. Their solution was to build a common system for all the networks. That’s where the word “internet” comes from: Inter-network.
Because the initial goal was helping highly technical researchers share information, there was no profit motive. All the money came from governments, meaning the early internet was paid for by American and European taxpayers.
But very quickly, companies saw a huge business opportunity with the internet. Imagine how much money you could make when your business could instantly communicate across the world with all of its customers, suppliers, and partners! This was obviously a huge opportunity for businesses. A few pioneering companies started lobbying governments for access, and eventually got the rules changed so they could participate. That kicked off the era of the profit-driven internet, where we still are today.
This point is critical to understand. The expansion of the internet — and the birth of the digital world — is fueled by the quest for profit. Companies use the internet to make money.
Think about the main sites we use online. Facebook, Twitter, Amazon, and Alphabet (which includes Google, Gmail, YouTube, et cetera). These companies are the ones we go to more frequently than any others. To be precise, at least 41% of our time online is spent on these four domains and their subsidiaries. Have you ever wondered how they make money? What the heck does anyone pay them for?
You Are The Product
The answer is advertising. Advertising, advertising, and more advertising! Look at their quarterly financial results if you don’t believe me. We may think these companies are technology companies, but the numbers tell a different story.
Google made about $17 billion from April to June 2015, and $16 billion of that was from advertising! That’s about 94% revenue from advertising. Facebook made about $5.8 billion in the final quarter of 2015. Guess how much of it was advertising. $5.6 billion, or 96%! And Twitter? $513 million out of $569 million in July to September of 2015 came from advertising. That’s 90% of revenue from advertising, which is the lowest percentage of the bunch.
All the other crazy stuff that comes out of the giant technology companies — the slick phones, the self-driving cars, the virtual reality, the (sort of) free global broadband network — is funded by advertising. They can only do all the sexy stuff because they are selling advertising to other companies.
Advertising is business-speak, so we need to clear up the language. It means charging one person money to let them try to get the attention of someone else. Google does this through their search engine, while Facebook and Twitter do it through social media.
Business have both customers and products. Two different groups: one that pays, and another that is the reason for the payment. Guess which one you are?
You are the product. Surprise again!
You are the reason that the company gives money to Google, Facebook, Twitter, whoever. What you have is time. And the company is the customer. They want you to spend your time buying their stuff. So they will give money to Google, or Facebook, or whoever for the chance to distract you from whatever you are doing to go buy their stuff.
Does this make sense? People go to Taco Bell to buy burritos. Companies go to Google to buy you. More specifically, your attention.
So even though you think that Google is made for you, it’s not. You can benefit from using Google — I know I do — but that doesn’t mean that it’s made for you. You are the product, all packaged up and ready to be sold to the highest bidder. The companies are the real customers. They have the money. They pay for the privilege of distracting you from what you want to do.
The top 4 websites in the U.S. — Google, Facebook, YouTube, Amazon — all make money by selling you stuff, either directly or via advertising. And yet these same websites are all amazing tools when you approach them with a clear purpose. All our relationships with tech companies contain this built-in paradox.
That sums up the challenge and opportunity of the digital world. We can accomplish great things if we can stay on track. And that’s a pretty big if. The internet can be only one thing at a time: an infinitely powerful tool; or a gateway drug to endless distraction. It’s up to you to change your mindset and daily behavior so that you are using the digital world, not being used by it.
Which is why you’re reading this.
Price Of Freedom
These technology companies — which are really advertising companies — have lots of customers, each one with tons of cash. They all want a piece of you. And they’ve stacked the deck in their favor. They are like the casino and you’re a gambler. What’s the expression? The house always wins.
The technology companies are the ones paying for everything. And that money comes almost exclusively from advertising. Think back to the questions from the beginning of the chapter. How did you think the drastic expansion of the internet and digital connectivity was funded?
We’ve been misled by the surface of the digital world. Our primary exposure comes through social media and email, which are “free”. We don’t pay for a lot of the products and services we use online. But that isn’t really true. They are “free” to us because we are the product, not the customers. Someone is still paying for the whole thing.
The rules didn’t change for technology companies. Every business needs to make money. There are no exceptions. Now let’s walk through the entire process to make sure we understand exactly how this works. Understanding the flow of money is critical.
Nobody goes to Google to look at the ads, right? You go to Google to search for something, and along with the results, you get the ads that are subtly sprinkled in. If you click on an ad, Google gets a few pennies (and sometimes much more) from the company that put up that ad. Every single time anyone clicks on any ad, someone somewhere is getting paid. And Google processes over 5.8 billion searches per day. We are a cash machine to them.
The same financial logic holds true for all the most popular websites. Eventually they all need to find a way to make money off the people who visit them. These companies reel in billions of dollars every year with advertising. That means they are making fortunes by distracting you.
You might be online to look at a notification, search for something, check up on a friend, or read the latest news. But the company knows a whole lot about us, too. They can take data from your profile and combine it with other information to make a compelling sale. They can target you because they “know” a lot about who you are from your behavior history online.
In other words, these companies sell us, a few seconds at a time.
The Auction Block
If the bidding process took place in the real world, it would sound something like this.
“Hey everyone! Gather around, please. Check out this delightful 27 year-old Asian-American woman who lives in the greater Austin area.”
“She has a job as a marketing executive making between $65,000 and $70,000. She recently updated her relationship status to ‘engaged’.”
“Let’s start the bidding at $0.45 for an ad! Do I have $0.45? I have $0.45, thank you to the local gym.”
“Do I have $0.50? I have $0.50, thank you to jewelry store.”
“Do I have $0.55? I have $0.55, thank you to the wedding planner.”
“Do I have $0.60? Going once. Going twice. Sold for $0.55 to the wedding planner!”
This whole process takes less than a second. Dozens, hundreds, even thousands of companies have software that lets them bid automatically based on complex formulas. They are trying to guess what your attention is worth based on the expected value of your purchases and the probability that you will buy something. That’s how the process works.
Us Versus Them
The digital world keeps you from pursuing your own agenda by grabbing your attention. It wants you to choke. Not because the system is evil or anything like that. The digital world wants you to choke because choking pays the bills.
The more eyeballs that see each ad, the more people click on the ads. The more people who click on the ads, the more dollars go into the company’s pockets.
Advertising — I mean, technology — companies have armies of digital marketers. Almost 250,000 of them in the United States alone. They are using software to build systems that compete for our attention every second we are connected. They study us. What we like, where we live, who we connect with, and what we do. The more they know about you and me, the more addictive they can make the things that are offered to us.
Unlike you and me, the digital advertising machine never sleeps. Companies have already developed programs that run themselves; the ultimate set-it-and-forget-it. You are worth that much to these companies. That little check they collect every time you see an ad eventually adds up to billions of dollars in profits. The total revenue for digital advertising will soon top $200 billion dollars per year. And think about the huge increase in screen time that we discussed in Chapter 2. Imagine how much that number will grow as more and more people join the digital world, and we get more and more addicted to it.
Please don’t misunderstand me. There is nothing wrong with profit. The problem we all face is that profit for these companies comes from our attention. They are selling their customers the chance to distract you from what you want to do. And they’ve barely gotten started. Soon they’ll be harnessing augmented reality, virtual reality, the Internet of Things, artificial intelligence, and the next thing after that.
Advertisers will be right there with you, ready to indulge you in the slightest whim. 24 hours a day, 7 days a week, 365 days a year. Forever.
It’s time for the unvarnished truth. We are unprepared for the world in which we find ourselves, a digital world where we are the product being packaged and sold. We haven’t been educated or trained for this always-on environment that is full of distractions. Some of us aren’t even aware of what’s happening.
For many people, millions of people, there’s a real possibility that they will get stuck choking for the rest of their lives. It doesn’t matter how old they are: 25, 50, 75, or 10. They will be so distracted so much of the time that they will never accomplish any substantial goals. Many will never even figure out what their goals actually are.
Those who get stuck choking will have an unremarkable life. These unlucky souls will make a few half-hearted attempts to do something outside the norm. But these efforts won’t last long.
The sad truth is that some people will grow too comfortable with distractions. Distractions fit so easily into our lives. Distractions don’t ask us to do anything different. All we need to give up is our attention. For the rest of our lives. That’s why all these huge technology companies build products to be so addictive. They want us constantly coming back for more and more.
That’s their business model: stay distracted until you die.
That is becoming the game plan for anyone who doesn’t take control of his or her life. Just like Andrew’s Reddit addiction from Chapter 1, we can end up wasting time online even though we know how deeply it affects our personal and professional lives.
But that’s not your future, not if you are reading this. You are preparing to get engaged, to grapple with tough questions, to change your mindset, to take action, and to help others wake up, too. The rewards for our hard work have never been greater. We can build the life we want in the same digital world that threatens to overwhelm and incapacitate us.
The question is, “Do you want it bad enough?”
What to remember about “Madder Men”
- The expansion of the internet is funded by digital advertising
- The most popular websites sell you stuff, that’s why they are “free”
- We are not prepared to function effectively in this environment
Take three minutes to reflect on these questions
- How many times per week do I buy things online?
- How often do I click on ads when I’m online?
- If every click cost someone a dollar, how much money would I make for other people on the average day?
If you want to spend one minute investigating Twitter’s business model, watch “How Twitter Makes Money”.
If you want to spend two minutes investigating Google’s business model, watch “How does Google Make Money?”.
If you want to spend seven minutes investigating Facebook’s business model, watch “How does Facebook Make Money?”.
If you want to spend three hours learning more about digital marketing, read Trust Me, I’m Lying: Confessions of a Media Manipulator by Ryan Holiday.