Monday, March 31, 2014

Beyond the ad-based web

In 1989 my father, Peter Sprague, identified that the future called for a commerce model for digital goods. Back then he was thinking about stock data and Calvin and Hobbes strips delivered to dedicated receivers over radio airwaves. Much has changed since then. The Internet went public a couple of years later and distribution became vastly simpler, but after twenty-five years we may just now be seeing a solution to payment.

Peter envisioned a world in which anyone who creates could easily sell to those who consume. Be it a poem, an image, an essay or joke. As implemented we called it the "Self-Merchandising Object" or SMO, a file that contains something of value as well as a price and a description of why you might want to unwrap it. On I posted a "thank you" letter for ten cents as a form of tip to the webmaster. This was back in the nineties.

In the intervening years the dominant model on the Internet has been data mining because anything but free is often too complicated. Most web services provide a free API in return for hooks into your users and the right to show ads. It's all about whatever is easy. The fact that one can integrate a third-party service into a site without having to contract explicitly with provider has helped the web grow incredibly rich with functionality. However, users are becoming increasingly tired and wary of this arrangement. Too much privacy is being lost.

Bitcoin points to a new future. It's not just that small transactions can be simple and cost effective, just as importantly the architecture enables servers to pay each other. As an open transaction network based on math rather than contractual trust it becomes possible to stand up web services that have built-in transaction fees for the use of their API's. You get self-merchandising services. Selling a poem for a small fee is nice, but the ability to mash-up web services based on small fees opens up a world of new possibilities for the web. When it becomes just as easy to charge ten cents as it is to drop tracker cookies, the coin of the land will evolve beyond personal data.

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