BackA new business model rises as the web cookie crumbles
The demise of third-party internet surfing trackers will see subscription businesses thrive online
PremiumOver the past year, two of the largest tech companies on this planet separately announced that they would be putting in place measures to prevent tracking technologies from uniquely identifying individuals as they move from site to site across the internet. It doesn’t take much effort to figure out that these announcements are aimed at loosening the stranglehold that third-party cookies have had for decades over the monetization of the internet—as well as the many privacy harms that they have caused.
Over the years, cookies have inserted themselves into every facet of our internet experience. They have found their way into websites everywhere. Today, they are capable of tracking online behaviour no matter where on the internet users may be, or how tenuous their connection is with the business that benefits from the data and insights gleaned. It is this ubiquity that has raised the hackles of privacy advocates, who have expressed concerns that an internet littered with cookies is effectively a giant surveillance machine, designed to create comprehensive, fine-grained profiles that will eventually be used to sell things to us. But it is this pervasiveness of cookies that powers the internet, providing fuel to a multi-billion dollar online advertising industry that in turn gives internet businesses the income they need to be able to provide their services free to us. As much as we dislike or distrust them, I am not sure we can do without them.
Now that the two primary gatekeepers of the internet are out to take them down, I guess we will finally see exactly how the cookie crumbles.
Reactions to the imminent demise of the third-party cookie have been interesting. Companies that rely on them to deliver personalized services are realizing that their businesses are about to be cut off at the knees, and are scrambling to find work-arounds. Businesses with access to first-party data (fast-moving consumer goods companies and the like) have gained a new-found appreciation for the value of their direct consumer channels and are re-engineering their operations away from a reliance on third-party data. All data collectors, regardless of where they get their data from, are coming to terms with the fact that they would have to prioritize privacy over personalization in how they operate.
Privacy activists, for their part, have been somewhat reluctant to celebrate this as a victory. While a world without third-party cookies is certainly an improvement, they are concerned that the technology that replaces it will end up concentrating power in the hands of a few tech giants. Even if the elimination of cross-platform tracking grants users relief in the short-term, they are worried that we don’t know what the long-term consequences of being divided into anonymous cohorts for the purposes of federated learning actually are.
This is not the first time we have attempted to rid the internet of its cookie infestation. I’ve previously written about the Solid project—Tim Berners-Lee’s last-ditch attempt to save his creation from itself. Solid offers us a way to gain more direct control over how internet companies use the data and information that we upload onto their websites and internet services. It allows us to create personal data stores of information that stays under our exclusive control and only releases information to social media platforms that we permit and in strict accordance with the terms we specify.
The problem is that all these solutions are just band-aids. They assume that the only way to keep the wheels of the internet machine turning is to accept that the advertising model is here to stay and then try and find newer, more acceptable ways to collect the data needed by that model.
But there are alternatives. Many internet-based services already operate on a subscription model. Streaming music services offer vast catalogs of music, podcasts and a host of other audio formats in exchange for a consumption-agnostic flat fee, just as streaming video services allow us to choose from a wide array of content in exchange for an affordable monthly charge. By taking a small annuity fee from a vast number of users, streaming services can eschew advertising entirely. But streaming is a relatively new addition to the bouquet of internet services and was designed this way from the ground up. Is it possible to apply similar solutions to more traditional internet services?
For most of its existence, the internet has delivered knowledge through text. We access information through blogs, websites and search engines, all of which deliver knowledge through interfaces that are primarily text-based and have always been free to consume. The ability to freely surf the internet from one site to the other, falling down rabbit-holes at the click of a hyperlink, is among the principal reasons that we go online. Adding a subscription layer to this almost feels like sacrilege.
And yet, we’ve already begun to see that happen. Over the recent past, there has been a steady proliferation of paywalls. Increasing numbers of creators are making at least portions of their content available for a fee—from the most influential news organizations to small independent platforms that offer niche content. Services like Substack have built on this idea, making it possible for individual writers to be paid in a way that was not previously possible. Dare we imagine this might be the best business model for the internet of the future?
Rahul Matthan is a partner at Trilegal and also has a podcast by the name Ex Machina. His Twitter handle is @matthan
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