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The problem of "users expecting free" is a trope. It isn't the actual problem. You get advertising whether or not you pay for a channel. You even get ads at th

by netcan 6y ago

The problem of "users expecting free" is a trope. It isn't the actual problem. You get advertising whether or not you pay for a channel. You even get ads at the cinema. You get spied on when you buy a phone, echo, when you use a paid app, subscribe to netflix, etc. It has nothing to do with free, in practice. This is just a way of pointing the finger at the public. "You are being abused because you are cheap and deserve to be". The "problem" is that advertising & espionage while creating market/portal/platform/feed monopolies is the most profitable strategy in most cases. A lot more profitable than selling stuff is. Just look at the largest fortunes made in recent times. A non-spyware messaging app would never be worth what FB paid for whatsapp, no matter how many paying users it had. Let's stop pretending that our moral failings and cheapskates are the problem. Newspapers have often had financial problems, and it has almost always been the case that "hard journalism" is not as profitable as entertainment media. Google are leveraging this to further cement their monopoly. They are the problem, not us. We are the victims.

thechao 6y ago
I want to argue that data gathering (in total) cannot be more valuable than selling stuff (in total), but I think that relies on a naive “pyramid” model of the economy. If I try to model this statement with actors (agents), I think it’s possible to build a set of mutually re-enforcing markets, where the value of data gathering for advertising is actually more valuable in aggregate than the “stuff” being advertised!
- Closi 6y ago
  Agreed, although the 'selling stuff' market is inevitably more fragmented than the 'data gathering' market, which means that the average 'data gathering' company will be more valuable than the average 'selling' company. That's not to say there aren't giants like Amazon trying to buck the trend...
- hrktb 6y ago
  Ads are not just data gathering, but behavior nudging as well. Directing people on what to do could be more valuable than actually selling goods, in aggregate. In particular when their actions have long term ramifications (e.g. politics)
  - srtjstjsj 6y ago
    In aggregate, that's only true if the directors are directing people to do things that lead to more money being paid to the directors, which is via shopping or I guess slavery (wage cuts?).
    - hrktb 6y ago
      Regarding elections, that would be gaining, or staying in power. In other ways it could be for insurance or other intangible services that scale well but need to be perceived as somewhat valuable. Even in cases where you still use goods to capture money, you can price the goods higher through changing buyer’s perception of value. In a way ads can bring you money from thin air if they are effective enough.
  - netcan 6y ago
    This is only just the beginning. Think credit scores, but lot more far reaching. EG qualifying people for jobs, school entry and such.
  - stainforth 6y ago
    If that's the case, then advertisement is anti-competitive and thus must be regulated as it violates the economic theory we've all agreed upon. I thought we were told we were all independent consumers making our own choices.
- netcan 6y ago
  This isn't a theoretical question! There have been many large fortunes made recently. They prove the point. Facebook/Google are the obvious example. Companies that are selling stuff for money (spotify, netflix) are bending over backwards to convince investors that this is just pocket money... the real value is in data gathering and monopoly building. Read their prospectus. Netflix's recommendation algorithm narrative was the main focus of their PR for years. There's a reason for this. Why has Tesla's stock price gone insane? Investors are betting that Tesla's data gathering has given them a meaningful edge in autonomous driving. The market value of this edge is (evidently) more than the market value of all other car companies combined. Look to tech acquisitions. Why are free apps like snapchat, whatsapp and such worth billions to acquirers like facebook? Have any paid apps even come close to this market value? No, because spyware, adware and monopoly building are far, far more profitable. Note that I say "profitable" in regards to income and "valuable" in regards to company value. It's true that the economy of buying stuff is big. It just isn't as profitable and therefore not as valuable.
  - thouitsme 6y ago
    I wasn't aware of their prospectus focus on this. I cannot stop thinking that "capitalism" is optimizing on surveillance. I wonder where that will lead us...
    - methodin 6y ago
      I'm almost thinking it will lead to ROI being less at the end. As they filter everyone through nice funnels ultimately they restrict reach such that "new customers" are less. Once that happens they will come back out to target "other people" not in their finely tuned categories and effectively be about where we are now. If roofers are my best customer as a hammer manufacturer and I market solely to them at some point all hammer manufacturers will come to the same conclusion and they will be fighting for the sole segment.
- marcosdumay 6y ago
  You need some complex and strange interactions for the customer interfacing market (there's no data gathering market, data gathering is a technique not product) to get larger than the real one in revenue, but it's trivial for it to happen on profit. I'm not sure it's even possible to discover if profits are concentrated there, the market can look exactly the same either way.
  - thechao 6y ago
    Right — it's really hard to disentangle "discovery" from "object sales". You can end up with a lot of B2B "cycles" that become self-supporting. Basically, the B2B cycles of discovery fund other cycles of "discovery" and the businesses mutually support each (think discovery- and software- as-a-service).
  - netcan 6y ago
    >>"* there's no data gathering market, data gathering is a technique not product) *" I would challenge this. It's is a technique in the sense that manufacturing cars is Toyota's technique. We would still call them an auto manufacturer and refer to this as a market, at least casually. Most social media (and also netflix, spotify... so maybe just "media) is feed driven. The anchor to these feeds is data gathering. The data gathering edge (along with network effects) is what makes a $100bn worth $100bn. It's what makes the product work. A twitter feed, e-commerce specials page or targeted advertising widget that is customised well is an entirely different product to an untargeted generic. If Tesla pulls off self driving, the difference between Tesla (worth $400b on expectation alone) and any other manufacturer their size (probably >$10bn) will be data. Data may not be the only thing that will be responsible for self driving, but it is proving to be the limiting factor in many of the most commercially important cases.
    - marcosdumay 6y ago
      So... Your post is a great example on how mixing practices and markets makes everything confusing. The OP is all about how revenue of marketing companies shouldn't be larger than the revenue of final goods companies. But there is clearly no such restriction on self driving cars, it's a final product all by itself. If you mix both into a "data gathering market", you have no means at all to analyze it.
ricardo81 6y ago
All your examples involved paying for something
- netcan 6y ago
  This is my point. Paying for something does not mean that you are not being spied on or advertised to. I'm contradicting the (harmful) trope that the reason ad centric data monopolies spy on us is because we refuse to pay. This just isn't true. They do it regardless.
  - ricardo81 6y ago
    Fairly sure with the advent of the web, Google were the first to track users on a worldwide scale, via search, adsense, analytics, chrome etc. Facebook soon followed with its popularity. Both provide free products. There may be added value for a seller to data collect though, of course.
the_other 6y ago
The amazing thing is that advertisers are willing to pay so much for so little. The only winners are the data markets.
srtjstjsj 6y ago
If ads were blocked and users paid for content, surveillance would be less profitable and so less would be done. Granted it's hard to coordinate both together, but let's be real: given the choice, 90% of the time users pick ads over paying -- you can see this among the vast majority of muggles who don't even try to ad block (so presumably don't really care about these issues) but still prefer free ad-based websites to paying for subscriptions. People pay for stuff that has a wall around it and can't be easily pirated. (Note: most news we read (measured by page views) is pirated by adware websites after someone published original research.) Maybe YOU block or just avoid ads and pay for non-spyware stuff, but businesses overall respond to the masses. Even on the super private ad-restricting expensive iPhone, most users immediately rush to adbacked trash websites.
- minitoar 6y ago
  Blaming my parents for not knowing how to install ad block or that it is even an option, and then expect them to navigate the anti-ad block JavaScript is a bit much.
  - netcan 6y ago
    Exactly! It's even worse than that, because even if your parents did know how to install an ad blocker it would not solve the problem. Data monopolies are fighting blockers, and the more they're used, the harder they fight. Pointing the finger at your parents is totally wrong. Your parents aren't at fault, all these damned spyware companies are at fault. This trite cliche has got to stop. It's both factually incorrect and morally unconscionable.
- netcan 6y ago
  Totally disagree. First, if users could effectively block advertising and spying, then the problem would be solved regardless of paying. The data monopolies (and would be parts of those monopolies) are actively and effectively combatting blocking. The "because free" trope is a blackboard theory. It's clearly not true in reality, but people still argue that it's "true in theory." This isn't a theoretical scenario. There are plenty of paid products, and they also spy on us. Echo, android, spotify... In reality, besides apple, most of the largest fortunes made recently in the tech space are based on advertising, data collection and monopolising the marketplaces, platforms, feeds or pipelines. Even Tesla's insanely high stock price is primarily based on data collection. It's their edge in the autonomous driving race. Teslas aren't free. Facebook and Google would still spy and advertise because it is far more profitable than selling, and creates a more convenient relationship with "customers." They also spy on their "partners," and were recently fined >$bn for doing so monopolistically. Anyway, the "adbacked trash websites" aren't the main problem... The main problem are the adbacked empires of Google Facebook & co.
Aunche 6y ago
The problem of companies abusing privacy and ads is not the issue being discussed. The problem is that most "good" news publishers has no way of making money without churning a lot of low quality content. Currently, the only high quality for-profit news publisher completely immune to this is the Economist, but there isn't much room in that corner of the market.
- netcan 6y ago
  I was responding to the problem as framed in the comment, which like ads & spyware gets explained with the (imo totally false) assertion that it's because people want free. I also commented regarding hard journalism, pointing out that the business dichotomy of "quality" content vs entertainment oriented content has always favoured the latter. Incidentally, I don't even think the Economist quite fits the description. They do mostly "editorial" style content. Commentary, punditry, summaries of recent events. It may be "quality" in literary terms, but it isn't exactly hard journalism in the investigative sense. It isn't really the kind of content that's in jeopardy. I think it's important to beat back the cliché that "free is the problem." It's often repeated, rarely challenged, taken for granted and factually incorrect. The financial problems of hard, investigative journalism problem exist regardless of content consumption trends. A quality investigative piece requires seasoned journalists to work for weeks, months or years. The economic value is "just an article." The article doesn't really make more money than a commentary piece that takes an afternoon to write. This is true regardless of business models.
  - Aunche 6y ago
    It's fair to point out that the Economist doesn't need to spend money on investigative research. My point is that their content quality hasn't degraded during the social media age. Publishers are willing to spend money on investigation but in order for people to read it, publishers need to package it for consumption, which involves some degree of sensationalization. Social media and the reliance of ad revenue have made this a lot worse. > The economic value is "just an article." I think that this is also essentially saying that people want nice things for free (or at a very low cost). I don't think the original commenter is actually trying to blame people for not paying for the news, even if they phrased this point in a more condescending way.

by netcan 6y ago

thechao 6y ago

I want to argue that data gathering (in total) cannot be more valuable than selling stuff (in total), but I think that relies on a naive “pyramid” model of the economy. If I try to model this statement with actors (agents), I think it’s possible to build a set of mutually re-enforcing markets, where the value of data gathering for advertising is actually more valuable in aggregate than the “stuff” being advertised!

Closi 6y ago
Agreed, although the 'selling stuff' market is inevitably more fragmented than the 'data gathering' market, which means that the average 'data gathering' company will be more valuable than the average 'selling' company. That's not to say there aren't giants like Amazon trying to buck the trend...
hrktb 6y ago
Ads are not just data gathering, but behavior nudging as well. Directing people on what to do could be more valuable than actually selling goods, in aggregate. In particular when their actions have long term ramifications (e.g. politics)
- srtjstjsj 6y ago
  In aggregate, that's only true if the directors are directing people to do things that lead to more money being paid to the directors, which is via shopping or I guess slavery (wage cuts?).
  - hrktb 6y ago
    Regarding elections, that would be gaining, or staying in power. In other ways it could be for insurance or other intangible services that scale well but need to be perceived as somewhat valuable. Even in cases where you still use goods to capture money, you can price the goods higher through changing buyer’s perception of value. In a way ads can bring you money from thin air if they are effective enough.
- netcan 6y ago
  This is only just the beginning. Think credit scores, but lot more far reaching. EG qualifying people for jobs, school entry and such.
- stainforth 6y ago
  If that's the case, then advertisement is anti-competitive and thus must be regulated as it violates the economic theory we've all agreed upon. I thought we were told we were all independent consumers making our own choices.
netcan 6y ago
This isn't a theoretical question! There have been many large fortunes made recently. They prove the point. Facebook/Google are the obvious example. Companies that are selling stuff for money (spotify, netflix) are bending over backwards to convince investors that this is just pocket money... the real value is in data gathering and monopoly building. Read their prospectus. Netflix's recommendation algorithm narrative was the main focus of their PR for years. There's a reason for this. Why has Tesla's stock price gone insane? Investors are betting that Tesla's data gathering has given them a meaningful edge in autonomous driving. The market value of this edge is (evidently) more than the market value of all other car companies combined. Look to tech acquisitions. Why are free apps like snapchat, whatsapp and such worth billions to acquirers like facebook? Have any paid apps even come close to this market value? No, because spyware, adware and monopoly building are far, far more profitable. Note that I say "profitable" in regards to income and "valuable" in regards to company value. It's true that the economy of buying stuff is big. It just isn't as profitable and therefore not as valuable.
- thouitsme 6y ago
  I wasn't aware of their prospectus focus on this. I cannot stop thinking that "capitalism" is optimizing on surveillance. I wonder where that will lead us...
  - methodin 6y ago
    I'm almost thinking it will lead to ROI being less at the end. As they filter everyone through nice funnels ultimately they restrict reach such that "new customers" are less. Once that happens they will come back out to target "other people" not in their finely tuned categories and effectively be about where we are now. If roofers are my best customer as a hammer manufacturer and I market solely to them at some point all hammer manufacturers will come to the same conclusion and they will be fighting for the sole segment.
marcosdumay 6y ago
You need some complex and strange interactions for the customer interfacing market (there's no data gathering market, data gathering is a technique not product) to get larger than the real one in revenue, but it's trivial for it to happen on profit. I'm not sure it's even possible to discover if profits are concentrated there, the market can look exactly the same either way.
- thechao 6y ago
  Right — it's really hard to disentangle "discovery" from "object sales". You can end up with a lot of B2B "cycles" that become self-supporting. Basically, the B2B cycles of discovery fund other cycles of "discovery" and the businesses mutually support each (think discovery- and software- as-a-service).
- netcan 6y ago
  >>"* there's no data gathering market, data gathering is a technique not product) *" I would challenge this. It's is a technique in the sense that manufacturing cars is Toyota's technique. We would still call them an auto manufacturer and refer to this as a market, at least casually. Most social media (and also netflix, spotify... so maybe just "media) is feed driven. The anchor to these feeds is data gathering. The data gathering edge (along with network effects) is what makes a $100bn worth $100bn. It's what makes the product work. A twitter feed, e-commerce specials page or targeted advertising widget that is customised well is an entirely different product to an untargeted generic. If Tesla pulls off self driving, the difference between Tesla (worth $400b on expectation alone) and any other manufacturer their size (probably >$10bn) will be data. Data may not be the only thing that will be responsible for self driving, but it is proving to be the limiting factor in many of the most commercially important cases.
  - marcosdumay 6y ago
    So... Your post is a great example on how mixing practices and markets makes everything confusing. The OP is all about how revenue of marketing companies shouldn't be larger than the revenue of final goods companies. But there is clearly no such restriction on self driving cars, it's a final product all by itself. If you mix both into a "data gathering market", you have no means at all to analyze it.

ricardo81 6y ago

All your examples involved paying for something

netcan 6y ago
This is my point. Paying for something does not mean that you are not being spied on or advertised to. I'm contradicting the (harmful) trope that the reason ad centric data monopolies spy on us is because we refuse to pay. This just isn't true. They do it regardless.
- ricardo81 6y ago
  Fairly sure with the advent of the web, Google were the first to track users on a worldwide scale, via search, adsense, analytics, chrome etc. Facebook soon followed with its popularity. Both provide free products. There may be added value for a seller to data collect though, of course.

the_other 6y ago

The amazing thing is that advertisers are willing to pay so much for so little. The only winners are the data markets.

srtjstjsj 6y ago

If ads were blocked and users paid for content, surveillance would be less profitable and so less would be done. Granted it's hard to coordinate both together, but let's be real: given the choice, 90% of the time users pick ads over paying -- you can see this among the vast majority of muggles who don't even try to ad block (so presumably don't really care about these issues) but still prefer free ad-based websites to paying for subscriptions. People pay for stuff that has a wall around it and can't be easily pirated. (Note: most news we read (measured by page views) is pirated by adware websites after someone published original research.) Maybe YOU block or just avoid ads and pay for non-spyware stuff, but businesses overall respond to the masses. Even on the super private ad-restricting expensive iPhone, most users immediately rush to adbacked trash websites.

minitoar 6y ago
Blaming my parents for not knowing how to install ad block or that it is even an option, and then expect them to navigate the anti-ad block JavaScript is a bit much.
- netcan 6y ago
  Exactly! It's even worse than that, because even if your parents did know how to install an ad blocker it would not solve the problem. Data monopolies are fighting blockers, and the more they're used, the harder they fight. Pointing the finger at your parents is totally wrong. Your parents aren't at fault, all these damned spyware companies are at fault. This trite cliche has got to stop. It's both factually incorrect and morally unconscionable.
netcan 6y ago
Totally disagree. First, if users could effectively block advertising and spying, then the problem would be solved regardless of paying. The data monopolies (and would be parts of those monopolies) are actively and effectively combatting blocking. The "because free" trope is a blackboard theory. It's clearly not true in reality, but people still argue that it's "true in theory." This isn't a theoretical scenario. There are plenty of paid products, and they also spy on us. Echo, android, spotify... In reality, besides apple, most of the largest fortunes made recently in the tech space are based on advertising, data collection and monopolising the marketplaces, platforms, feeds or pipelines. Even Tesla's insanely high stock price is primarily based on data collection. It's their edge in the autonomous driving race. Teslas aren't free. Facebook and Google would still spy and advertise because it is far more profitable than selling, and creates a more convenient relationship with "customers." They also spy on their "partners," and were recently fined >$bn for doing so monopolistically. Anyway, the "adbacked trash websites" aren't the main problem... The main problem are the adbacked empires of Google Facebook & co.

Aunche 6y ago

The problem of companies abusing privacy and ads is not the issue being discussed. The problem is that most "good" news publishers has no way of making money without churning a lot of low quality content. Currently, the only high quality for-profit news publisher completely immune to this is the Economist, but there isn't much room in that corner of the market.

netcan 6y ago
I was responding to the problem as framed in the comment, which like ads & spyware gets explained with the (imo totally false) assertion that it's because people want free. I also commented regarding hard journalism, pointing out that the business dichotomy of "quality" content vs entertainment oriented content has always favoured the latter. Incidentally, I don't even think the Economist quite fits the description. They do mostly "editorial" style content. Commentary, punditry, summaries of recent events. It may be "quality" in literary terms, but it isn't exactly hard journalism in the investigative sense. It isn't really the kind of content that's in jeopardy. I think it's important to beat back the cliché that "free is the problem." It's often repeated, rarely challenged, taken for granted and factually incorrect. The financial problems of hard, investigative journalism problem exist regardless of content consumption trends. A quality investigative piece requires seasoned journalists to work for weeks, months or years. The economic value is "just an article." The article doesn't really make more money than a commentary piece that takes an afternoon to write. This is true regardless of business models.
- Aunche 6y ago
  It's fair to point out that the Economist doesn't need to spend money on investigative research. My point is that their content quality hasn't degraded during the social media age. Publishers are willing to spend money on investigation but in order for people to read it, publishers need to package it for consumption, which involves some degree of sensationalization. Social media and the reliance of ad revenue have made this a lot worse. > The economic value is "just an article." I think that this is also essentially saying that people want nice things for free (or at a very low cost). I don't think the original commenter is actually trying to blame people for not paying for the news, even if they phrased this point in a more condescending way.