According to a Mckinsey Article, (https://www.mckinseyquarterly.com/Marketing/Digital_Marketing/The_Webs_100_billion_euro_surplus_2724), the web currently contains a $100 billion surplus that belongs to consumers and web users.
Based on a research survey with over 4,500 participants, the figure is derived from calculating the “value” that web users place on the benefits that they experience – whether it be from a social networking website or streaming videos and movies – as well as the costs that they would be willing to pay in order to avoid (such as pop-up advertising and perceived privacy risks).
Mckinsey estimates web use to be worth $150 Billion (extrapolated from participants by analyzing their willingness to pay for different online activities). Currently, $30 billion of this is already being being paid by consumers, when considering music/movie subscriptions or online gaming services. An additional $20 billion of cost is also found from the pollution of internet experience that comes with pop-up advertising, spam, and privacy risks. At the end of the day, this means there is still a $100 billion consumer surplus for web use.
How will producers respond to this? Given that the consumer surplus is expected to grow $190 billion by 2015, it seems producers are looking to take some of this web-based value. There are some potential outcomes in which surplus switches over from consumer to producer:
Increase service costs:
Producers may increase their prices for current web-use such as online gaming sites and subscription -related services. However, research shows that increasing prices will greatly reduce web usage overall – firms which increase cost will need to take this into consideration.
Increase Advertising:
As advertising increases, it is true web companies will gain more revenues. Currently advertising revenue is at $30 billion (giving potential leeway for expansion since the cost to web users is $20 billion). However, what will the consumer’s reactions be if advertising significantly? Will the willing to pay for avoidance increase to the point that web usage drops as well?
Other means of monetization include continuing the free services in order to attract big audiences, promote their online brand and hope for greater market value and thus greater profits for the future.
Whatever the outcome is, users should prepare as the web economy is due for a shift in then next decade.