No Free Lunch
Recently, because of some Wi-Fi issues that I have been having with my Samsung Smart TV, I pondered between 1) running an ethernet cable from one end of my living room to the other or 2) purchasing a Chromecast. I am, of course, a sucker for technology, and cables are “so not my thing”. So I went on and purchased the latest Chromecast, the one that has a remote and runs on Android TV. It runs great!
One of the untold benefits that came with this new “shiny” mate device was 3-months of free YouTube Premium, which removes all ads from your experience and includes YouTube Music in the bundle.
I’m sorry but I have to say, watching YouTube without ads is an amazing experience! No more unsolicited dude with a husky voice telling me about this Canadian-made whiskey for “good times” or this freaky girl singing about how great Sodastreams are with a ukulele that is dangerously tossed around minutes after I Googled the same product on my phone. Instead, I get exactly what I clicked for, the god-damn cat video. If anything, this experience made me reminisce about why I gravitated towards YouTube in the very beginning.
The good old times
Most people around my age (turning 30 this year… sigh) would remember the time when YouTube wasn’t consolidated as the go-to service for user-generated videos. I remember watching the Back Dormitory Boys back in high school in a no-name webpage and would only revert to YouTube to watch music videos. I also remember giving up on other services like Viki because there were so many ads in it. Slowly but surely, like many others, I have gravitated towards YouTube because the experience was so much better. After all, there were no ads.
Fast-forward to now, ads are most of what I see and the technology behind it is getting better and better (we bought a Sodastream).
The good, and the bad
Of course, there are many good things about the ad serving model. It allows us to use services like Google and Facebook for “free”. It also allows content creators to make a living out of their creative endeavors. We cannot forget, however, that these good things also came with a bad symptom — the black-box algorithm that filters and prioritizes contents in our feeds or searches.
I won’t go deeper into the weird consequences of such algorithms, but looking at how YouTube Premium offered such a good experience for 11.99 Canadian dollars, I started to wonder how much it would cost a user to pay for services like Facebook and Google.
Let’s do some math!
Starting with Facebook, in the fiscal year of 2020, the company brought in a total revenue of around $85B. If we divide this number by the number of active users in the same year, around 1.3B, that would leave us with a cost of $30.70 per user a year, or $2.56 per month.
Google, during the same period, had revenue of $185B for 1.3T searches, which amounts to around $0.14 per search. Considering that users, according to Hubspot, make on average 4 searches a day and multiplying that value by 365 days, that leaves us with $208.60/year or $17.38/month.
$2.56/month for Facebook and $17.38/month for Google in addition to the mountains of other subscription fees that we already pay for. Is that a price that I am willing to pay for such services? We need to keep in mind, also, that this is the cost for matching their revenues in 2020 and that these companies trade stocks in the open market, so these prices would certainly go up every so often.
I remember how this one day when I started my first job, I was very amazed because this Union representative took our team for lunch at this fancy restaurant. One of my seniors — a veteran labor law lawyer — noticing how amazed I was at that, took me aside and told me: “Artur, remember that in this world there’s no such thing as a free lunch. You always end up paying for the bill one way or the other”.
I guess the same is applied here. If you are not directly paying for the product or service — you become the product.
Originally published at http://imarturbai.wordpress.com on May 21, 2021.