bit-tech.net

Why Web 2.0 will end your privacy

We all know the plushy, rounded, pastel-coloured faces of Web 2.0. MySpace. Digg. Flickr. The achingly trendy Silicon Valley startups that are selling for millions to big media conglomerates and making their founders into stars. Tom Anderson. Kevin Rose. These are the pinups of the Web 2.0 generation - but little do they know the monster they've created.

My firm belief is that the net effect of the Web 2.0 movement will be a marked loss of privacy on the internet, one which leads to big business knowing more about you than it ever did before. This is why.

Defining the genre
Let's start by examining what exactly we mean by Web 2.0. It's a buzzword, a catchphrase - a candy-coated way of glossing over a core set of principles and technologies. Most people will take Web 2.0 to mean the rise of bloggers. The growth of social networking. The invention of tags and the contribution of end users to the final product. It means freedom to connect and share with your friends. It means desktop-like applications on the web. Whilst an exact definition escapes even the brightest, this can be taken as a fairly close approximation.

"Web 2.0 is also about the evolution of online businesses"

Let's take some exemplar applications. Digg.com is a brilliant example, since it combines many of these Web 2.0 facets. Unlike a traditional news publication, end users write the news that appears on Digg. News they've written, and news they like, is linked to their profile. Their profile is linked to the profiles of their friends, so that social groups can check out each others' recommendations. There's some funky programming and some blogging thrown in with it.

Then let's take MySpace, the ultimate social network (and now owned by Rupert Murdoch's NewsCorp). Users can share music, thoughts, pictures and words and can meet new people and discover new interests through their online links. If MySpace tells you that your friend likes The Super Arctic Guitar Axe Nirvana Marsupials, well, you might too.

Web 2.0 is also about the evolution of online businesses. Google is turning from a search engine to an advertising company. Email is being sidelined into a business niche by instant messaging. Outlook and Office are becoming increasingly redundant as PIM applications are being Ajax'd. Getting everything online has never seemed so important.

Benefits to the users
And why not? The more this 'movement' grows, the more the web evolves, the better for the end user, right? Already, Digg has taken a hatchet to traditional publishing, with users proving pretty good at finding stories that satisfy their own demographic - and its popularity is a testament to that. MySpace has enabled teenagers everywhere to escape the dastardly clutches of their parents and do what teenagers do best - namely, skulk around, making awkward social contact with the opposite sex and opining over the latest bands and fads.

Flickr has provided free photo hosting for millions. Thanks to some great coding, sharing photos with other people has never been easier. The integration of Larry Lessig's Creative Commons licenses even means that Flickr has some stick-it-to-the-man indie creds too, to attract otherwise sceptical washed out hacks and code monkeys. Google Mail and Calendar make Outlook redundant for many - why pay Microsoft when you can do everything you want online, for free? With the growth of networks worldwide, as well as cellular internet connectivity, you're virtually never without a net connection.

Web 2.0 sites provide some of the best functionality and fun on the web. Isn't that pretty neat?

The calm surface
But for all this user coolness, the benefit to the companies involved here is minimal. I mean, so minimal, it's what convinced me to look under the surface in the first place. Take Flickr, our last example. Bought out by Yahoo for millions upon millions of dollars, it makes next to no money whatsoever. Look at the site. What is on there that makes money? Sure, you can have a premium membership, but I bet you can count the number of users that have paid for that on the fingers of the hands of the millionaires that Flickr's sale made. Yahoo is burning money at an alarming rate to keep Flickr online.

Digg recently took $1m in venture capital to grow its business. Its sole source of income appears to be adverts at the top of the page, provided by Google - not exactly raking it in. Digg has been remarkably slow to roll out new features and to show its hand when it comes to raking in cash. The only features that have been put in have been to allow users to connect better with other users and to allow them to see what other users are doing.

Perhaps a more extreme example is YouTube. It is reportedly burning $1m a day in bandwidth costs to serve the amount of video being put up there. How on earth are they going to find cash to cover that?

Back to top

Wil Harris

So what's the conspiracy?
The major question therefore becomes, how do any of these businesses plan to make money? They are all burning cash, and none of them appear to have a revenue model beyond Google ads. Sure, Google ads is great - but that really only makes money for Google itself.

Why are the companies worth so much money? Why is MySpace worth over half a billion dollars without a proper revenue model? Why is Digg allegedly pitched at over $20m (at the last count) without any idea of where money is going to be pulled from?

"Digg knows what stories you've submitted, what demographic you're in, how other people in your demographic react to what you post"

The answer is - data. Information. Marketing. Every detail about you and me. That is where the money is.

This is not necessarily a new argument. I've heard it thrown at me by various followers of the Web 2.0 bubble, who allegedly regurgitated it from some of the 'A-List' bloggers out there, including John Battelle.

But the argument holds weight, nonetheless. The one thing the Web 2.0 sites have in common is that they are furiously mining information about you and your buddies. What you like. What you like that your buddies like. Digg knows what stories you've submitted, what demographic you're in, how other people in your demographic react to what you post. MySpace can break its users down by almost any statistic imaginable, then mine that data for more information about what it is you're doing and sharing online, and how that relates to your friends in the same (or different) demographics.

Flickr is perhaps one of the most interesting ones. Search for 'cat', and Flickr will record the most popular photo clicked. By associating the colour and picture data within photos with keywords used to search, Yahoo is slowly building a database of human identification. It has often said that the differentiator between Yahoo and Google, going forward, is that Yahoo wants the web processed by humans and Google wants it done by robots. Google uses algorithms to generate anything to do with its business. Yahoo, with its acquisition of Flickr and Delicious and whatever else is on the horizon, wants people - and social networks - to define how it does business.

The EndGame
So Murdoch knows everything about MySpace. The financial gurus at Yahoo know all about your personal thoughts, pictures and bookmarks. The guys at Google know everything about your search habits, and you can bet they want to link 'em up to your email and calendar and whatever else you end up using online. How much is that data worth? With marketing spends online going ever upwards, as more and more of the world 'logs on', you can bet that it's only going to get more and more valuable.

And where it's valuable, it will be bought and sold. Our social networks, searching habits, visual identifiers and personal preferences will be mercilessly sold to anyone who wants to get their hands on our particular demographic. And when your photos, your files, your email and your friends are all online, you'll have to be online - and thanks to net everywhere, like the Google San Francisco project, you'll always be able to be online. And as long as you're online, they can market to you.

When the Web 2.0 bubble bursts - when the massive buyouts are done, the millionaires are made and the sites we love today are in the hands of big business - the innovation will grind to a halt, and what's left will be the endless grinding of the marketeering machine.

But hey - at least you'll be closer to your friends. And you'll have free photo hosting, too.