There have been many large fortunes made recently. They prove the point. Facebook/Google are the obvious example.
Companies that are selling stuff for money (spotify, netflix) are bending over backwards to convince investors that this is just pocket money... the real value is in data gathering and monopoly building. Read their prospectus. Netflix's recommendation algorithm narrative was the main focus of their PR for years. There's a reason for this.
Why has Tesla's stock price gone insane? Investors are betting that Tesla's data gathering has given them a meaningful edge in autonomous driving. The market value of this edge is (evidently) more than the market value of all other car companies combined.
Look to tech acquisitions. Why are free apps like snapchat, whatsapp and such worth billions to acquirers like facebook? Have any paid apps even come close to this market value? No, because spyware, adware and monopoly building are far, far more profitable.
Note that I say "profitable" in regards to income and "valuable" in regards to company value. It's true that the economy of buying stuff is big. It just isn't as profitable and therefore not as valuable.
Directing people on what to do could be more valuable than actually selling goods, in aggregate. In particular when their actions have long term ramifications (e.g. politics)
In other ways it could be for insurance or other intangible services that scale well but need to be perceived as somewhat valuable.
Even in cases where you still use goods to capture money, you can price the goods higher through changing buyer’s perception of value. In a way ads can bring you money from thin air if they are effective enough.
I'm not sure it's even possible to discover if profits are concentrated there, the market can look exactly the same either way.
I would challenge this. It's is a technique in the sense that manufacturing cars is Toyota's technique. We would still call them an auto manufacturer and refer to this as a market, at least casually.
Most social media (and also netflix, spotify... so maybe just "media) is feed driven. The anchor to these feeds is data gathering. The data gathering edge (along with network effects) is what makes a $100bn worth $100bn. It's what makes the product work. A twitter feed, e-commerce specials page or targeted advertising widget that is customised well is an entirely different product to an untargeted generic.
If Tesla pulls off self driving, the difference between Tesla (worth $400b on expectation alone) and any other manufacturer their size (probably >$10bn) will be data.
Data may not be the only thing that will be responsible for self driving, but it is proving to be the limiting factor in many of the most commercially important cases.
The OP is all about how revenue of marketing companies shouldn't be larger than the revenue of final goods companies. But there is clearly no such restriction on self driving cars, it's a final product all by itself.
If you mix both into a "data gathering market", you have no means at all to analyze it.
Data is constantly growing new uses, which can go from economically marginal to central very quickly. Data gathering just isn't something that is a distinct market all on its own. The same dataset could feasibly power an ad widget, recommendation playlist or whatever.
That's not to say there aren't giants like Amazon trying to buck the trend...
Granted it's hard to coordinate both together, but let's be real: given the choice, 90% of the time users pick ads over paying -- you can see this among the vast majority of muggles who don't even try to ad block (so presumably don't really care about these issues) but still prefer free ad-based websites to paying for subscriptions. People pay for stuff that has a wall around it and can't be easily pirated. (Note: most news we read (measured by page views) is pirated by adware websites after someone published original research.)
Maybe YOU block or just avoid ads and pay for non-spyware stuff, but businesses overall respond to the masses.
Even on the super private ad-restricting expensive iPhone, most users immediately rush to adbacked trash websites.
The "because free" trope is a blackboard theory. It's clearly not true in reality, but people still argue that it's "true in theory." This isn't a theoretical scenario. There are plenty of paid products, and they also spy on us. Echo, android, spotify...
In reality, besides apple, most of the largest fortunes made recently in the tech space are based on advertising, data collection and monopolising the marketplaces, platforms, feeds or pipelines. Even Tesla's insanely high stock price is primarily based on data collection. It's their edge in the autonomous driving race. Teslas aren't free.
Facebook and Google would still spy and advertise because it is far more profitable than selling, and creates a more convenient relationship with "customers." They also spy on their "partners," and were recently fined >$bn for doing so monopolistically.
Anyway, the "adbacked trash websites" aren't the main problem... The main problem are the adbacked empires of Google Facebook & co.
You pay for the Echo/Android device. You aren't paying form Alexa and the Android OS and core apps like Maps. None of this can exist if without some for of using your data for profit. I don't think it's fair to lump Neflix and Spotify into this. Their data collection is directly related to the services they provide like recommendations. IMO it's at the same level of data collection as supermarket rewards cards, which are most people are happy with.
Or don't get the option. Please make my local newspaper take a subscription for ad-free browsing :)
There are also the times when the subscription is as predatory as the ads, like the traditional US large publishers where you can sign up online but have to call a number and go through marketing to cancel. Those aren't any better than the ads.
Data monopolies are fighting blockers, and the more they're used, the harder they fight.
Pointing the finger at your parents is totally wrong. Your parents aren't at fault, all these damned spyware companies are at fault.
This trite cliche has got to stop. It's both factually incorrect and morally unconscionable.
I also commented regarding hard journalism, pointing out that the business dichotomy of "quality" content vs entertainment oriented content has always favoured the latter.
Incidentally, I don't even think the Economist quite fits the description. They do mostly "editorial" style content. Commentary, punditry, summaries of recent events. It may be "quality" in literary terms, but it isn't exactly hard journalism in the investigative sense. It isn't really the kind of content that's in jeopardy.
I think it's important to beat back the cliché that "free is the problem." It's often repeated, rarely challenged, taken for granted and factually incorrect.
The financial problems of hard, investigative journalism problem exist regardless of content consumption trends. A quality investigative piece requires seasoned journalists to work for weeks, months or years. The economic value is "just an article." The article doesn't really make more money than a commentary piece that takes an afternoon to write. This is true regardless of business models.
> The economic value is "just an article."
I think that this is also essentially saying that people want nice things for free (or at a very low cost). I don't think the original commenter is actually trying to blame people for not paying for the news, even if they phrased this point in a more condescending way.
My point was that free or unfree are not the issue here. It's just not true, just as its not true about advertising or data gathering. Free isn't what's making a problem. It was a problem before. Whether your business model is eyeballs (it usually is in print, online, paid or free), subscriptions or both the most important types of journalism aren't economical. They're generally produced because journalistic cultures value them. Those that don't generally just become tabloids.
Sending a journalistic team to Yemen to produce 10 articles is much more expensive than having people work from the office and produce 100 articles about politicians' and academics' opinions about that war... or articles about Kim and Kanye. A view is a view, a magazine sale is a magazine sale.
I'm not even sure people "want nice things" in the sense that they want quality journalism. We want them to have "nice things." It's important for society. Doesn't necessarily benefit the reader much.
Good journalism has always been hard to fund and rarely economically sustainable. Nothing to do with "people these days" or with "free."
It's related to FB and Google in a roundabout way. They are the monoliths. They get all the bread. People read the content on FB, and if you don't want to let them then people will read someone else's content. So people read the content on FB, and FB gets the ad money. FB doesn't have a journalistic culture, journalistic ethic, or any kind of ethic. It was the journalistic ethic that was enabling hard journalism to be cross subsidised. That ethic is now broke.
I'm contradicting the (harmful) trope that the reason ad centric data monopolies spy on us is because we refuse to pay. This just isn't true. They do it regardless.
Both provide free products.
There may be added value for a seller to data collect though, of course.
You get advertising whether or not you pay for a channel. You even get ads at the cinema. You get spied on when you buy a phone, echo, when you use a paid app, subscribe to netflix, etc. It has nothing to do with free, in practice. This is just a way of pointing the finger at the public. "You are being abused because you are cheap and deserve to be".
The "problem" is that advertising & espionage while creating market/portal/platform/feed monopolies is the most profitable strategy in most cases. A lot more profitable than selling stuff is. Just look at the largest fortunes made in recent times. A non-spyware messaging app would never be worth what FB paid for whatsapp, no matter how many paying users it had.
Let's stop pretending that our moral failings and cheapskates are the problem.
Newspapers have often had financial problems, and it has almost always been the case that "hard journalism" is not as profitable as entertainment media. Google are leveraging this to further cement their monopoly. They are the problem, not us. We are the victims.