No Free Lunch

You always hear: there is no such thing as a free lunch. The common train of though is if I don’t take any money out of my wallet and I use a product then it is free. I can read Wikipedia, without paying for it. I can keep my contacts with Gmail without paying a dime. Read the New York Times without shedding a nickel. All my lunches are free!

Time to burst the bubble: no they are not. There has  been a gradual shift catalyzed by the Internet where your information is the new currency. Which sites “cost” you the most information? The ones you use the most: email, facebook, myspace, etc. Just check out the infamous Gmail privacy policy, which outlines how they own any email that enters your inbox. Delete an email? We got those too. Think your Facebook information is private? Think again. Google is not shying away from this philosophy, in fact they are embracing it according to VP Marrisa Mayer who announced that the “free” service Google News is actually worth about 100 million dollars through referred search advertising (reference).

People have reduced their use of email as as instant messaging and social networks have seen rise, but most still use a single email address to login to many different sites with. This is another shift in the online world, your email is your identity.In the online world, your email address is what your name is in the concrete world. There are companies that have wised up to this and taken charge such as the successful San Francisco startup Rapleaf that sells your information tied to your email address to companies that want to know more about you.

Only two questions remain, how much am I worth monetarily and where is this money coming from? There are some helpful empirical figures — Facebook last valuation suggests $300/user, but realistic figures show $21 for Bebo and $27 for Myspace or a rough $24/user average (reference).  The money is coming from purchases made by the fastest growing product of the web: advertisements. The more information that is known about you the better the ads can be targeted, which makes the ads more relevant, and  the likelihood of a purchase significantly higher.

The end lesson: be conservative with your identity. Using more than one email address by all means is a good idea. There is a silver lining; if a company knows what music, movies, or books you like they can customize the experience for you and make their product better for you(you win). This makes the potential of online advertising to be far richer than what you see on TV and newspapers. However, having your future employer discover incriminating information about you can be detrimental so always take caution.

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