How Free is the Internet
In 1996, "A Declaration of Independence of the Cyberspace" was written by John Perry Barlow.
It highlighted the embodiment of what this new world meant for people and society.
20 Years Later, This is the Economic State of Cyberspace.
The graph below outlines the percentage in GDP (right) of the digital economy in different countries, and the growth rate (left) of the digital economy,
GDP (Gross Domestic Product) is a basic economic measurement on the dollar production within a country, and usually indicates the health of a country's economy.
The expected growth looks promising, and hasn't gone unnoticed by prospective job applicants and students. The emphasis to obtain digital and technical skills is everywhere.
Here's the problem.
- We are using traditional economic models to measure the production of a digital "product".
- Cyberspace knows no boarders. The growth of the digital economy is an international effort.
- A collective agreement of valuation in cyberspace has not been established. The success of a digital product does not correlate with their monetization methods and revenue. (i.e. Vine, Twitter)
Overall, the digital economy does not function the same way traditional economic models function. Which means this system of valuation is also broken.
So How does the internet make money?
There are 2 types of businesses for internet companies (for the most part).
These are companies in which their product is the software, mostly used for more efficient business operations. Most software companies have moved to a SaaS (Software as a Service) business model.
Platform business models are websites or apps that acts as a mediator between a producer and a consumer. This is your Google, Facebook, YouTube, LinkedIn, Airbnb, Uber, etc.
- Advertising: This is the big one. (Google makes 89% of their $66 billion revenue from serving ads)
- Subscription: Users pay on a timely bases to use the product. (i.e. Netflix, Spotify)
- Lead Generation: Using the website as a way to obtain contact information on potential customers. Lead generation is used for higher ticketed items.
- Selling Data: Everything you look at and click on is data. A company may sell this data to other companies for insights or new users.
- Freemium: The product itself is free for anyone, but additional add-ons will cost extra to offset the production of the whole product.
What This Means for You
- You, as a user, are a commodity.
- Every click you make is generating value somewhere.
- Privacy is and will continue to be compromised.
Keep in mind though, change and progress are an inevitable part of societal development. Our standard of expectations will also shift as we adapt to these new rules.
As of now, staying informed will be the most beneficial thing to do in this ever-changing world. You can do so by subscribing below 😉