Advertising: Not because it worked

Why do we have an advertising funded Web? Not necessarily because it works. It doesn’t.

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 matter—what mattered was audience growth, as a site with tens of millions of loyal users would surely find a way to generate revenue.

And are start-ups making money on ads? No, only a rare few. When is Pinterest going to turn a profit? And even the profitable companies seem not to make a ton of money. Take Facebook. $791 million in profits in a quarter looks good. But on 1.32 billion users, that’s 60 cents per user. Average time spent on the site? 40 minutes per day. Or 60 hours per quarter, which means the average profit per hour spent on their website is 1 cent.

Want to do better than Facebook? You need to move deeper into the world of surveillance. Great stuff. Read it all: The Internet’s Original Sin.