Internomics!! I thought Internet was free! Isn’t it so?

What do you mean by economics of Internet? Internet is free!! Isn’t it? Economics can only be applied to scenarios or events where for some benefit an individual need to pay something in return. If you are getting something for free there is no economics involved. And on Internet most of the services we use are for free – Gmail, Facebook, YouTube, News, Music, Games, Twitter, Maps, Spreadsheets, Blogs etc. Has Gmail ever charged a fee for delivering mails in your mailbox, or does Facebook charges you for creating your profile on it or uploading a photo, does YouTube ask for a fee on viewing a video or have Twitter ever charged you for posting a tweet? So since one is not paying any money in return for these services, people tend to think that there is no economics involved. But it’s not correct.

Have you ever thought that why are these organizations or individuals running these services if there is no revenue model involved. I know today most of you will be able to answer about their business model which is that all these companies make their big buck through Online Advertising.

But this still doesn’t answer the question that as a user what are we paying to these companies for using their services?

Let me clarify it here that there are no free lunches in this world. So if you think that you are being served by all the above companies for free then it’s not true. You are paying them not in hard cash but in some other currency – which is valuable information about yourself.

Yes, it’s the rich user data that these companies have access to when users enjoy their services. So whenever a user uses these services, they end up paying them with data about themselves. And this data is provided either explicitly by the user through filling registration details on these websites or implicitly by viewing content, clicks or interacting with these internet applications.

This data is very valuable as it tells all these applications about you and then they can better target advertisements to you. So next time when you use any of these internet services rest assured that you are paying a price for it – it’s not real dollars but rich information about yourself.