So last week, I set the stage for a discussion about a glimpse into the future that blockchain technology promises and how it could begin to change the way we use the Internet. Well guys, it’s time. This week we tackle the e-commerce industry’s biggest game – advertising.
Advertisements, advertisements, advertisements. In every sense, this is how the internet is monetized. This is how marketers turn your eyeballs when looking at computer screens into profits. In a way, it wasn’t the Internet that invented ads. Advertising has always been the way television (hey, remember that thing, kids?) makes use of its programming.
Unlike movies and theater or HBO (subscription cable), which generate income through ticket sales or paid subscriptions, broadcast TV gives you free content. Your only entry cost is to purchase a large piece of hardware as a receiver. The only problem is that your money goes to the hardware manufacturer and not to the content providers in the programming you’re watching. So someone thought (maybe in the early fifties) that it would be a good idea to sell ad space in between programming or even a portion of funded programming so that they could monetize by proxy popularity of their software. The business formula was born.
Advance fast into the internet age, and although it took a decade or so before the critical mass of users reached a certain point1 To capture the interest of advertisers, this model has translated directly into the world’s favorite new media consumption channel…
So what is wrong with this?
Nothing much, I think. Furthermore, it’s not much different from what we usually think of as an advertising model. Or is he?
Thanks to the power of the internet and the ability to choose “programming” individually, came the other ominous side of that coin. Advertisers and brokers now have minute details about your private life, buying habits, food preferences, and everything. Whereas back when you were only consuming streaming media, you were not an individual. Now, you might all also get paid subscribers for an individual cable package, all the shows you’ve watched, all the things you buy, all the websites you’ve visited are tasty bits of data that advertisers are willing to pay for.
Enter Omar Orientation marketing. Advertisers can now purchase accurate data on the demographics they want their ads to show. But there is an asymmetry here. While advertisers and marketplaces are gaining something they didn’t have before, you, the consumer, haven’t. The additional profits that this gold mine extracted from the data from your collective brain did not go to you, but to the brokers, the gatekeepers, Google, YouTube, Facebook, Twitter, Amazon and those who hosted ads. This seems a bit unfair.
So what are the alternatives?
Is it time to retire the whole “eyeballs on the page” model?
Simply put, the alternative is to remove intermediaries and allow advertisers direct access to the data they want while paying the people who provide the data directly, and in the process of doing so, letting people control the data they want to share. And yes, that’s – wait for it – a little push2 Use case!
We consider our browsers to be primarily the gateway to our online interactions. How much do you trust your browsers? Of course, what makes them three times more honest:
- There is competition in the browser market. There are always alternatives.
- They are either open source or made by companies that may lose a lot of money if their reputation is damaged. This disincentive to behaving maliciously is what maintains the trust we place in browsers. But the third reason is something most people don’t think about.
- Which is that the data on your browser is of no value and cannot be monetized in isolation. There is simply not enough reason for the developer to leak your data, so calculating the cost/benefit generally results in browsers being secure enough. This is key, because if we want to start trusting our browsers to work for us, we have to make sure that they don’t end up selling our time as a search engine or perhaps Twitter.
So how exactly can our data be monetized? Well, we need our browsers to be a “data broker” for us.
It will not only be where all of our data is organized and managed, but also all payments and transactions to access that data. Much of this technology already exists. What is needed is just a plug-in digital asset wallet with some smart contract capability on the blockchain to advertise the data and make sure that access to it can be managed in a secure and atomized manner. This can be achieved simply by putting the data in a string and encrypted, using a one-time key so that it can be traded via key exposure3. Blockchain removes data hosting requirements instead of including data in unspent coins on the Bitcoin blockchain to represent data drops.
Since this data is intended to be passive income for those who generate it, a simple crypto is likely to be good enough, and it can even be done without paying any mining fees as these are likely low priority transactions and don’t need mining in the next block, and therefore you will incur low or no mining fees.
A small discursive: Where do you find Internet advertising and where are they appropriate?
Where ads work: (e-commerce)
Amazon, eBay, Craigslist, etc. where you’re already shopping for something, receptive to alternatives
Where the ads are annoying: (websites, social media)
YouTube, Facebook, Twitter, The New York Times, The Telegraph – they just stand in their way.
Where ads can be annoying or useful: (Search Engines)
Google, Yahoo, Bing – depending on whether or not you’re looking for something to buy or just looking for information.
Next imagine a data-browsing marketplace, demographic, facilitated by blockchain-aware browsers, allowing users to organize, categorize, price their data and even allow whitelists or blacklists of potential buyers. All of these types of business rules are exactly the kind of thing that Bitcoin smart contracts are good at, maintaining the spendability of coins or data on pre-set conditions. These conditions may be whether the requested asking price is met or not, whether the company is whitelisted for accepted buyers, etc. On the other side of the commerce, neatly disaggregated data is of great interest to advertisers, ensuring that the data purchased fits a specific demographic target for an advertiser makes this even more valuable to a data buyer. It’s a win for both data producers and data consumers.
This form of marketing research data collection largely replaces the simple model where marketers pay to display ads on screen real estate on websites that only track their visitors, as only the website is the intermediary in this transaction. Let’s say your browser can post targeted ads (you pay the viewer to view them). In this case, this eliminates the web’s perverse incentive structure and temptation for websites to “sell” their real estate and focus only on providing information that users want to read (and pay to download). This means returning to a market that is more dependent on the consumer than one that relies on advertisers.
Today, intermediary advertisers spend unreasonably large sums to get their ads in places that users see often. At the same time spending excessive amounts on marketing to convince users that they should buy their products. They literally create the market and shape the market.
They are product peddlers and influencers to make you want to buy their products. This is a perverse motivational structure, as the winners are the influencers, advertisers, and marketers who can convince the most people to do something. the Consumers don’t pay them, so they do not have the best interests of consumers in mind.
If this all sounds a little crazy to even be understood, keep in mind that paying to view a website is not a new concept. In fact, this was something that the original web designers considered4, but it wasn’t practical at the beginning of the web. Thanks to the reliance on third-party credit card processors and payment processors. Now with Bitcoin, we’ve removed the last remaining hurdle to micropayments on the web (below $0.01), and with it, the power on the web is finally, finally, monetizing efficiently. By allowing direct circulation of information, through the magic of a simple standard called HTTP and Bitcoin SV, we can finally have a consumer-centric Internet economy without intermediaries trading our information. This is a world that we must see with our own eyes, without a third party making money from it.
/ Jerry Chan
Notes: It also required the development of tools and platforms to allow the creation of mass decentralized content. (Hey YouTube!)  The hoopla is that the micro-payments market is something that has been talked about for years since the invention of Bitcoin and has not been successfully developed since.  I realize I’m vague here, but you can probably think of ways to achieve this if you’re using a digital currency. I will not reveal all my secrets for free.  The famous HTTP error message “402 Payment Required” is proof of this.
New to Bitcoin? Check out CoinGeek’s Bitcoin for beginners Section, The Ultimate Resource Guide to learn more about Bitcoin – as envisioned by Satoshi Nakamoto – and the blockchain.