I remember standing in Microsoft Research New England, talking with a few brilliant mathematicians and computer scientists. Twitter had just started including ads in their feed, and there was much grumbling and surprise. I responded that Twitter only had a few choices–fewer, given that they were giving away their service for “free.” A quick look at media history shows basically three business models have existed for media institutions: direct sales (eg, you buy a book), patronage (rich people hire painters, or states sponsor broadcasters), or by selling the audience to a third party. Many media industries combined these: buy a magazine, and it had ads. Some cable networks also had ads. In the Twitter case, since they had already been giving their “product” to users (let’s face it, the users were making the product for them), they didn’t feel they could start charging. They were already running on one business model, patronage (venture capital in their case, but patronage all the same) and that was running out. So short of another patron, it had to be ads unless they invented a new way of making money off media. One of the people there said something to the effect of “wow, I never knew it was that limited–I wish someone had told me.” I said “that’s why it’s good to have a media historian around.”
We see this pattern over and over: venture capital in the form of patronage makes an internet service or platform attractive to users in a “too good to be true” fashion. Later, advertising or some other marketing scheme is brought in to make money, and the platform or service is worse for it. A great case study for academics would be what happened to academia.edu when they ran out of runway.
In my intro media studies course back in the early 2000s I’d bring in the fall or spring Vogue fashion issue, topping out over 700 pages, and have the students compare how much it costs them vs the science textbooks they carried around (I never use textbooks for my courses). Then I asked them in what way they did and did not trust each publication, and why (and what it would mean to have ads in textbooks).
Visual capitalist recently released an infographic on how the “tech giants make their billions.” Facebook and Google bring in most of their revenue from advertising: Facebook at 98.5% and Alphabet at 70.4%. But advertising also lurks behind Amazon’s profits, since the site advertises object to you all the time.
One of the promises we were sold in the 1990s and 2000s was that the internet was fundamentally different from other media, and including its business model. But a passing familiarity with media history shows why this never made much sense.
The internet was supposed to be different. The fact that it’s not should give us pause. All media that have ads in them–newspapers, broadcast, magazines, and on and on, are subject to considerably more regulation than Facebook, Amazon, and Alphabet/Google. Maybe it’s time we treat them like the media businesses they are.