What is this post about? TLDR

We want to get the most for our buck. However, for the last 200 years, society at large was conditioned to advertising. Advertising is there to influence us: it eats into our time, attention, and ultimately changes our behaviors. As society gets wealthier, the business models transition away from the ad-supported models into direct pay models. We are in the middle of this transitioning.

Where did the advertising come from?

As long as society had a medium for transmitting information, there was an industry focused on shaping the society's behaviors. In mid-1850, Thomas J. Barratt in London started implementing the very first brand marketing. To this day, we spend very large portion of our time consuming the advertising.

﻿



Terrestrial Television, Cable Networks & Amazon Studios

Roughly 100 or so years ago, public broadcast networks were getting started. Starting as radio & later as TV, American households got the access to powerful medium of information dissemination. The business model for terrestrial television was ad-based. As society got wealthier and new technology emerged, the cable networks emerged and got really popular in 1980s. The business model became a combination of advertising and subscriptions.

﻿



Fast forward to today: Amazon Studios saved Expanse TV show, and the new “streaming only” season 4 just came out with a different, more lax, format for how the show runs.

﻿



Wait, what? How is it related to this article?

﻿



Directly. :)

﻿



As Expanse was originally produced for cable network SyFy, it had a strict policy of not running even a second longer than 42 minutes, and also adjusting the show for the fact that advertising breaks are happening.

﻿



As the show got cancelled after 3 seasons and later picked up by Amazon Studios because of Jeff Bezos's personal admiration for the Expanse book series, the episode duration is no longer an issue, and the production crew didn't need to adjust the show for the advertising breaks.

﻿



That's interesting.

﻿



In other words, as Hollywood is getting eaten alive by Netflix and Amazon Studios, we are moving into the next phase of this industry's evolution: direct pay model. Consumers pay with their wallet for what they want.

﻿



Ads are still there, both Netflix and Amazon still rely on them, but we are moving to a direct pay model.

﻿



Internet's Original Sin

As Marc Andreessen explained here, both Microsoft and Netscape tried to work with banks and credit card companies and embed the payment into the early browsers. This collaboration didn't work out, and the Internet evolved over the same arc as the entertainment industry explained earlier.

Over time, mature Internet native advertising companies emerged. By now, they produce a lot of cash flow by selling people's attention, also pay top dollars for top talent to ensure the status quo continues, leading to them ultimately controlling the advertising industry at large.

﻿



Interestingly, the new business model emerges.

﻿



Similarly to the entertainment industry described earlier, Internet is moving from ad model to direct model, slowly.

﻿



Digitally Native Society Without Ads As society becomes wealthier, it moves away from ads to a direct pay model. As you get wealthier, you choose to pay for the ability to be in control of your time and attention.

﻿



As Naval Ravikant explained here, there is a "fifth protocol" emerging. This one focuses on exchange of value, and it's native to the Internet.

﻿



What do these two trends mean?

﻿



On one hand: as society gets wealthier, it has an option to move away from advertising. On other hand: there is a digitally native exchange of value.

﻿



Well, I think it's fairly easy to predict what happens next. We already observed this evolution in entertainment industry.

﻿



We start with ad-based model (terrestrial networks), we move into the hybrid ad + direct pay model (cable networks), and then we move into direct pay only model (Amazon Prime Video).

﻿



Open Web

Fast forward to couple years into the future, and you will start seeing a larger transition under way. Original sin of the Internet will be over-written.

﻿



You will have a new wallet. Unlike a wallet you keep in your pocket, you will not only store the money there, but you will also store all kinds of data related to you: reputation data, social graph data, health data, family/personal data, recommendations data, historical data related to your life, and more.

﻿



From this wallet as the origination place for all things related to you, there will be millions of new web applications emerging. Each person will be using different kinds of applications, and these applications won't be reliant upon an advertising business model.

﻿



Instead, indie developers will be building narrow focused apps for which the narrow audience of the app will pay directly to the developer.

﻿



It will be a direct pay model, and the advertising will no longer take our time and attention, or affect our decisions.

﻿

