(Preview) The End of the Ad-Supported Internet, Imagining What Comes Next, A Human-AI Agent PSA
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Hello, and welcome to a free preview of Sharp Tech. Hello, and welcome back to another episode of Sharp Tech. I'm Andrew Sharp, and on the other line, Ben Thompson. Ben, how you doing? Doing okay, Andrew. Licking my wounds, I feel like, just in general.

I have to take L's left and right in these, in these NBA playoffs, which are, are really whimpering to a close. Yeah. Going to have to bow at the altar of Sam Presti in the Oklahoma city thunder.

The nerds won. Look, you have a, they have a good team. They have lots of draft. I feel like I'm partly responsible. Yeah. You were on Simmons's podcast, taking shots at the thunder. You and I radicalized each other. We're sort of on the intellectual dark web for the NBA. The reality is look, the current NBA, you should not go for it. Uh,

Exactly. I wanted it to be true. I wanted it to cost the thunder and alas, it will not cost the thunder, but it's good to be back. We were away all week and we're going to be talking about the state of the web on this episode. You wrote last week about the end of the ad supported human internet that we've come to know for the past 30 years. And it's

It's an outcome that is probably obvious to most people in technology, but may not be fully internalized by the mainstream just yet. You synthesized a couple different trends that are happening at once. Before we get to the future, though, and how all this might evolve, I want to talk about the ad-supported human internet and talk about what's ending. So can you tell me more about the origins of the model that's about to...

hit obsolescent. Well, I think there's always been a real, I mean, this goes back to my longstanding general overall defense of advertising and things along those lines. Like I think it's very easy to see all the crappy parts of advertising and to miss the fact that just at a real fundamental level, there are products out there that need to reach users and now they can. And I think that's a good thing. And, you know, it's interesting. I,

I kind of put Stratechery in that category, even though I've never advertised, but I got free advertising via social media. Like, like just the fact that this company can exist, this publication can exist. This podcast can exist is thanks to the internet and like,

There is a bit where I'm not going to sit here and pull up the ladder on other entities that don't lend themselves to social media sharing like Stratechery did, and yet which I'm glad to exist, right? Like the things that make money on Instagram ads and find people that wouldn't exist otherwise and create products

that wouldn't have a market when back in the day, and everyone, when you talk about margins and Facebook and all these bits and pieces, you forget that to make any sort of product in the past,

you had to not just make the product, you had to get distribution for the product. You had to go to a department store or go to Sears or go to- I was going to say, yeah, lobby the grocery store. Right. Software is a great example. You had to go to Circuit City and get your thing on the shelf, right? I think it's really easy to forget about all the benefits, particularly all these little niche products that you have. There's a-

There's a product I'm a fan of is the tiny – I was just thinking about this because I just acquired a third one, the TinyPilot KVM switch. It's like this network-attached thing where you can control – it connects directly to the internet, and a KVM is you get the input from a computer, and you have keyboard and mouse input connected.

And KVM switches have existed for a long time. There's actually cheaper ones than this. I like this because it's basically like a Raspberry Pi. It's totally standalone. It's a Linux distribution. It's open source. I put Tailscale on it, one of my all-time favorite services, so I can access it from anywhere. And if I'm in a place different than a computer or I need access to a network, I can...

And that computer is down. I can still have access to it. Super niche use case. But that's the whole point. It's a super niche use case that has not just this product, but actually multiple products in this space that meets a need that I have that I can find out about. Is that going to go viral on social media? Not necessarily, but I can learn about these new products and buy them and acquire them.

It's awesome. It wouldn't have been in a circuit city 30 years ago. Right. No way. No way. I think this was originally a Kickstarter. There's actually a new version like Jet KVM. I know one of my friends really likes that needs a web service. So I actually like the more expensive, more hacky one that I have. But whatever. It's shocker.

We're deep in nerddom here, right? I don't even know what you're describing, but I love it. It's top of mind because I literally, a friend of mine has one. It doesn't work anymore, so I just bought it for him. I'm like, yeah, I could use it. There's a gazillion things we have, and it kind of ties into the trade stuff too, right? Like, oh, there was some, what did I get? Oh, yeah, I was shipping some, or I was carrying some boxes back on an airplane the other day.

And I got the maximum size box that would fit in my luggage allocation. Hard to carry, right? Because it's this big box. So I go down to the local, you know, they call them department stores here. But they're like these shops that just carry a massive array of junk. All sorts from China or whatever. A junk store. Sounds great. I get this strap that...

it has a little metal triangle in it so it can naturally wrap all the way around a box. It has like a plastic clasp, goes together. It costs me like three bucks. I'm like, you know what? China rules. Like someone randomly is making this. This is awesome.

This perfect strap that perfectly meets my needs. Does that exist? Is that out there? There's all this consumer surplus from on the internet. All this is tied together, right? A lot of this quote-unquote junk is advertised on Instagram. And you buy this or think, wow, that's actually exactly what I needed. Never would have known about that or been aware of that. Or Amazon carries it or whatever it might be. It's really easy to forget and not appreciate things.

how great that is. And all of this just makes all the junk you can possibly imagine more accessible than it ever has been. And I'll be honest, what is junk? Like the web is junk, right? There's just like a gazillion websites of every sort of thing. Stratechery is, you know, one person's treasure, another person's junk, just another website out there on the internet, right? Like, like, cause it doesn't cost another bozo on the bus. That's right. That's right.

And all this is, is amazing and fantastic. And advertising is an essential component of that, right? Like all of that is to say, this is a corrective to the people who are wringing their hands over what advertising hath wrought on the internet. That's right. So there was this, this, this idea that was coined by, I winked in this article, Ethan Zuckerman, and then when I took a 2014, it's got picked up by a lot of people since then about the original sin of the, of the web was not having native payments.

payments and again there's very good reasons why that didn't exist there wasn't the infrastructure for it uh even if the banks were eager to do it or the credit card companies i can promise you credit card payments don't you need a certain business model for them to i don't even understand what the dream business model was there wasn't one it's just a way to complain about no just a way to complain about advertising like like and like so i i had another quote from mark andreessen where he talks about because he

the guy who actually helped invent the web and one of the first consumer browsers. And he talks about this and they try to do something and they talk to credit card companies. I can read his quote. I've got it in front of me right here. We tried very hard to build payments into the browser. It was not possible.

We made a huge mistake. We tried to work with the banks. We tried to work with the credit card companies. It was sort of the classic kind of single point of failure bottleneck, or at least in this case, two points of failure. Visa and MasterCard essentially had a duopoly at the time. And so they were just literally, if they did not want you to be in the switch, they did not want you to be able to do transactions. You just simply weren't going to do it. But I don't understand if Visa and MasterCard had played ball in

Is it like you pay two cents per website you visit? Is that what they were envisioning? No, it doesn't even work with the fee structure. This is part of the problem, the whole microtransactions thing. This interview that I quoted Marc Andreessen in was an interview about crypto. He's talking his book, right? Like the idea that this is something that can solve this problem. And that's

fine and well i think there's potentially a role here i brought up crypto in this article but looking backwards to the 90s everyone's talking their book to an extent andreessen's talking about crypto ethan zuckerman just wants to complain about advertising so not only is it mistaken and unrealistic it actually misses the fact that advertising has a lot of good things

But it's all tied into this concept of the human web. Websites were made for people.

Advertising works on people. It's all about human attention. It comes down to, just from an economic perspective, we talk about all the time, you can only monetize what is scarce. What is scarce is attention, right? Even if you go to a subscription model, my whole framing of subscriptions is you're paying for the ongoing production of work. My work is scarce. My time is scarce. And I'm asking people to pay for that, making a promise about future delivery.

et cetera, et cetera. And there has to be something in the trend in that, that is scarce. So this idea that we would have had this magically different world, if payments had been built into the browser and been there from day one, number one, it's unrealistic. And number two,

I think it ignores, casually dismisses the massive consumer surplus that has been the free internet. And the reality, say like a newspaper or a publication, yes, you can criticize them for making an error and saying, oh, let's put all our stuff online. We can now reach the whole world.

But there's a bit where they could have maybe approached it differently, but the structural forces were what they were, which is the internet made you compete. The problem, again, to sort of return to a theme we've been coming back to the last few weeks and months is,

is you're now competing with everyone. What everyone's mad about when it comes to the internet is that your, is the level of competition. Perfect competition is ruinous. That's right. That's a theme we've returned to several times over the past year or two. Um, yeah. So with newspapers, it's funny you mentioned newspapers because I think about advertising on the open web and the human internet, and it feels like this is the death knell for, uh,

a model that has been on life support for the last 10 years. Oh, it's mostly, it's mostly dead, right? I mean, the vast majority of newspaper websites are atrocious. There's 50 gazillion ads, basically unusable without an ad blocker by and large. We might've gotten this too. I used to be very self-righteous about people using ad blockers. I'm like, if you don't want access to content, then I know. And then you came down from the mountaintop a couple months ago and said, I don't, I, I use an ad blocker now. I've become what I despise. It's awesome.

It's unusable, right? But that's what I mean. I think you look out at the internet right now and we are in the nadir as far as advertising is concerned. The advertising has never been less effective outside of Google and Facebook. And also, it doesn't seem to be supporting open websites anymore.

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