The price of free

For years, you got Youtube, Facebook, Google and other online services for free. But did you ever wonder why? Free

Well, as it turns out, you’ve been helping to build a database that probably requires several Petabytes of disc space to store and manage.

The data contains everything your computer and online activity has ever learned about you: Where you browse, what you buy, what you “like,” and who your friends are.

So really, the price of free has always been your privacy.

Having that super detailed “targetable” data is advertising’s holy grail. Instead of spending thousands or millions of dollars on a traditional advertisement and spraying it out across an ill-defined universe of consumers who may or may not give a darn about the message – the new advertising allows custom messages to be delivered only to the people who are most likely to be interested.

Google is now tying its various databases together to juice its already robust advertising revenues. Facebook is getting ready to roll out a whole new package of advertising options which could very well make it the dominant advertising platform in the world.

Is this evil? People are sure doing a lot of handwringing about it.

But at least the online model has it right: You either get a free service and “pay” for it by being subjected to advertising, or in some cases, you become a subscriber and just pay for the content without the advertising.

With that said, you still see examples of the “double dip.” The double dip is where you pay for the content, and ALSO have to suffer the advertising.

Cable television is a great example of this – charging consumers to watch a channel, and selling the time on the channel to advertisers. Some of the online content providers are doing the same thing… but many are not – seemingly “getting it” when it comes to the resentment savvy consumers harbor when it comes to double dipping.

I think consumers should be more vocal about being double dipped. If you’re paying a subscription, you should get paid for agreeing to be the subject of advertising, or be able to opt out. If you’re being “served” ads, the content or service should be free. Pushing bytes across a wire is not longer “special.” Distribution is a commodity, and frankly, content is becoming commoditized too.

I realize there are a million reasons why this argument doesn’t fly – consumers are “trained” to accept double dipping – distributors complain about the fees they have to pay – producers complain about their costs and the broken nature of the traditional advertising-driven business model.

But in reality, even though content producers and advertisers don’t like to admit it, the costs of either production or distribution are no longer prohibitive by themselves, and get even better when you have both. Broadcast television always “got” this and proved that distribution could be free when advertisers paid. The Internet can deliver the same thing at even lower costs, no matter how much the providers complain about the erosion of their whopping margins. The advertising model isn’t dead – it has just moved and become much more efficient. This shouldn’t be the consumer’s problem, but they have to be AWARE of what is happening.

In the end, “free” may not have turned out to be free because it cost us a certain amount of privacy – but at least Facebook, Google (the P.I.) and others like them seem to ”get” the modern value proposition.

Has this ever occurred to you? Have you ever sort of shaken your head as if waking up – wondering why you’re paying to access online subscription based websites or cable TV and being solicited? Do you care? Just wondering.