How advertising has warped the internet economy

Advertising has become the backbone of the internet economy

Advertising has become the backbone of the internet economy


Last week, I wittingly clicked on a banner ad for the first time in my life. Not only that, I proceeded to take out my credit card, type in my details and hand over some money. What sort of banner ad, you might reasonably wonder, could possibly prompt that sort of behaviour in a reasonable person? Have we not reached a point of human evolution where our eyes and brains have developed a cognitive blindness to such advertising?

The web has always been a cauldron of strident disagreement, but if there’s one thing pretty much all users can agree on it’s that most web ads are an exasperating and pestilent feature of online life. Those ads have been popping up and under and over the web for so long, chasing after our attention in desperate fashion, that they now seem like an intrinsic feature of the web, but there’s nothing inevitable about them – they are the regrettable result of the way the web and the online economy developed.

But there was, at least conceivably, another way. When, in the 1960s, the famous tech visionary Ted Nelson originally devised his wildly ambitious Project Xanadu, a conceptual predecessor of the world wide web that has never been completed and probably never will, he included a feature that would have had drastic implications for the modern online economy.

Nelson set out 17 rules for Project Xanadu, one of which was a “royalty mechanism at any desired degree of granularity to ensure payment on any portion accessed”.

That would have meant that rights holders would get paid every time their content was accessed, via a payment system built into the network.

Now, Nelson’s five-decade struggle to complete Project Xanadu was so quixotic and his vision so impractical that any exercise in “what if” alternate historical conjecture must be seen as a fanciful flight of the imagination, rather than a serious assessment of an internet culture that we narrowly missed out on. But on this feature alone, the consequences would have been vast.

When Tim Berners-Lee came along and and created a much simpler, more practical hypertextual network, the world wide web, he understandably skipped over the notion of incorporating a royalty mechanism – he was originally building a network of linked academic documents, after all, and in any case in the early 1990s, such a feature would have been technically infeasible.

But absent a frictionless royalty mechanism allowing micropayments, the web was going to have to develop a different economic model – websites were forced to sell, not their content, but rather their readers’ attention to advertising networks. And a terrible ugliness was born, because the metric used to measure that attention was the humble click, which became a kind of internet currency in itself.

The advertising-focused, click-dependent economic model is one of the most far-reaching and under-appreciated developments of our age.

It led to the internet primacy of Google, and has shaped and humbled entire industries.

Attempting to get readers to click on ads leads to all sorts of perverse incentives, and has resulted in a rather perverse online economy, with a raft of middlemen ad networks and layers of inscrutable technology tracking our browsing habits to optimise those ubiquitous ads, and even more technology to counteract those ads.

Last week the bewildering complexity of the web economy became clear to me over coffee with Till Faida, the managing director of AdBlock Plus, the browser extension already installed by 250 million users and two million more ad-averse users every week.

“It shows there’s huge demand – people are unhappy with the state of ads on the web,” says Faida of their success. “This is a message that can no longer be ignored.” In a rather controversial move, AdBlock Plus has financial agreements with certain advertising networks who fulfil their quality criteria to let ads through their blocking filter. As Faida puts it, those arrangements are in recognition that, while most ads are infuriating, advertising is the fundamental economic model the web relies on, and encouraging better, less intrusive ads is preferable to vanquishing them completely.

In a recent essay, legendary tech entrepreneur Marc Andreessen suggests that Bitcoin, which features internally validated transactions, might ultimately allow for micropayments and provide the infrastructural underpinnings to the sort of royalty mechanism that Nelson once proposed. “With Bitcoin, there is an economically viable way to charge arbitrarily small amounts of money per article, or per section, or per hour, or per video play, or per archive access, or per news alert,” he wrote. If that came to fruition, we might be able to wean ourselves off the clickthrough and the intrusive web ad, but that’s a big if at the moment.

As for that ad I clicked on, no need to worry about my sanity – it was simply the case that, while doing some research on Wikipedia, a subtle, sincere banner ad caught my eye, and I finally made a contribution to the crowd-sourced encyclopaedia commensurate to the value I get out of it. If felt good, supporting such an amazing project, but I very much doubt I’ll be clicking on any other web ads for a very long time.

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