All of our consumption and production/storage of digital artifacts on the Internet causes costs (especially because of the physical scarcity of the utilities it runs on, including time, wires, electrical power, resources to build and maintain data centers, etc.). Offering Internet services gratis is a great way to get rid of any competition that charges for the same or similar service. With many eyeballs on the gratis offer (that causes unsustainable costs none of the consumers want to pay as it was promised that they wouldn't have to, so it is expected henceforth to be and remain gratis), in the attention economy, advertising is a way to cover the costs, but this only works for one single entity by avoiding that attention is fractioned into other competing gratis offers, and most attention is awarded only to places/piles that offer the most data/storage/whatever gratis, which prevents other small gratis offers from arriving at a similar position. The massive costs that the largest gratis offer faces act as a barrier of entry for smaller gratis competitors.

Advertising has its own mechanisms: for small advertisers, they go for targeted ads, maybe based on contextual data of the user, which is bad for privacy. But a large portion of income is generated from those who advertise very broadly not to sell something on the spot, but for brand recognition that pays off at the many other places where the actual product is for sale, in a very long-term strategy (influencing children to become brand-aware as customers/consumers in their adult life). Of course most of these advertised products aren't really needed and available in excess in times of industrial mass production, but that's why the advertisers have to instill and invoke consumerist desires and make sure that they will want the particular product/brand that was advertised earlier (also for status, product fetishism and "lifestyle" etc.), especially because such products tend to be more expensive than those of the competition precisely for the reason that the customer somehow has to pay for all the expensive advertising.

So our consumption of these overpriced products nobody really wants/needs is paying for our consumption of seemingly "gratis" Internet offers/services, which therefore have to be centralized ones as existing corporations can and do use all their power and capital to sustain this model in which they're the winners. The promise of the Internet was that market information could/would/can be instantly accessible globally to everybody for perfect market fit, so there's no need for advertising, so in a new model, massive gratis services would hardly be offerable any more by commercial entities (it still could be the job of institutions, libraries, governments, the public), or we would have to pay for it ourselves. The companies that provide the gratis offers are resisting this as well because they would become attackable from open competition, would have to restructure their business model and work more for the money instead of accumulating profit and if we would pay them for service, then we would start to make demands like real customers do, that they don't have to deal with when it's all about freeriding. One way of resisting improvement is to artificially trap people and data technically, legally and socially, so that it's too late to transition to better alternatives or even current competitors (paid or gratis), because it would mean that we would loose connections, history, capabilities, which they carefully designed to be lock-in dependencies. They deliberately don't help much to move the data to other contexts other than what's required by law. It's a race to the bottom not only to the lowest price, not only arriving at gratis, but offering more features/storage than the other gratis competition. Whoever ends up with grabbing the largest usage share, is likely able to cross subsidize the expenses of the gratis operation with paid offers people become dependent on, especially businesses who then have to increase the prices of their products – not so much because there aren't cheaper offers to businesses for the same functionality, but because the expensive one of the otherwise largest gratis offer is cleverly constructed to be the only one that provides access to vast amounts of users and their data, and integration that other competitors are prevented from by carefully sabotaging interoperability.

That's more or less what advertising does to the Internet and we to ourselves and each other right now. Furthermore, it's based on a push-based model and why should people ever accept advertisements being pushed at them if they don't explicitly request such? In a decent digital future, all information could be pulled when wanted/needed. But then that's not advertising any more, which is why I'm not sure how to even come up with a place/role for advertising in a proper digital future.

Copyright (C) 2019 Stephan Kreutzer. This text is licensed under the GNU Affero General Public License 3 + any later version and/or under the Creative Commons Attribution-ShareAlike 4.0 International. See also the revisions (rendered) of this text.