Google's new targeted-ad e-mail offering rekindles debate over the economics of free

For something that's free, Google's latest offering, a web-based e-mail service known as Gmail, has sure made a lot of choppy waves. Since it was announced on April 1, Gmail has been lampooned by privacy activists, who are unsettled by a key aspect of its business proposition.

For something that's free, Google's latest offering, a web-based e-mail service known as Gmail, has sure made a lot of choppy waves. Since it was announced on April 1, Gmail has been lampooned by privacy activists, who are unsettled by a key aspect of its business proposition.

Its users get one gigabyte of storage - a lot more than Yahoo and Microsoft offer gratis, and more than the average user would need - in exchange for having advertisements attached to messages based on their content. Even though no human eyes will pass over the text of the message, which will be "read" only by Google's computers as they match up the ads, consumer watchdogs have been quick to focus on the risks of allowing a company to peer into personal communications. While this issue stands firmly in the province of privacy debates, the backlash also says a lot about a question that's crucial to online commerce and communications: What exactly will people pay for? The economics of free, whose central truism - that consumers won't pay for online editorial content - led to the downfall of many a dot-com media outlet in the early part of this decade. And this will be no less relevant to the inevitable resurgence of online journalism as it searches out a viable business model. Despite Google's vehement contentions that the watchdogs are misinterpreting the risks, which are, it says, nil, it would seem to take a lot to convince consumers that offering any access at all to private correspondence is a good idea. This is especially so given that competitors are asking for only $10 a year for a gig that comes without the risk of an invasion of privacy. As such, one question the concept behind Gmail indirectly poses is what is the true value of something that's free, a question that has vast implications for the web. Rightly or wrongly, the way the Gmail issue is now being framed for consumers is nothing less than a tension between privacy and commerce, between the sanctity of an e-mail in-box and the benefits of targeted ads paying for a service that costs the user nothing. Google maintains there is no trade-off because the users' information is safe, but doubtless there will be many users for whom the issue is not whether the information can be manipulated. They simply just don't want to be besieged by marketing, smart or otherwise. After all, it's a lot easier to shrug off the weight-loss ads on MSN.com than it is the highly targeted shilling you get on a personalized Amazon.com page. If it wants to make Gmail work, Google has a lot to explain. Consumers will have to be made to understand precisely the risks and potential value. Arcane discussions of algorithms and firewalls won't cut it, especially if the company wants mass acceptance for the programs. And Gmail's success, once it gets out of beta tasting, may be a bellwether for just what and how people will pay for online as the internet gets more and more sophisticated.

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