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Logged-in Web

Open networks need superior economics to rise. Today private networks control consumer identity and data to massive enterprise. The cookies are stale. It's time for the Logged-In Web.

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5/26/2024

Last week Ari Paparo and Eric Seufert spoke about growth opportunities for digital advertising.

Ari’s take is that the open web – everything not managed by the Walled Gardens – is dying.

Walled gardens are well-tended. They have direct distribution to consumers and rich identity via user log-in furnished with longitudinal customer data that enables great user experiences including relevant ads and increasingly measurement.

On the other hand, with cookies set to deprecate sometime in 2025, ads on the open web are about to lose their predominant identity. Worse, ads products on the open web are fragmented and home to unscrupulous intermediaries that, according to Seufert, “exist to commit fraud.” Taking these two together – the loss of identity and murkiness of business practices– it’s easy to see why Ari might be right.

The open web is dying.

Many in AI say ads get in the way of great internet experiences. But ads are what enable the free and open access of information.

Lou Montulli famously of Netscape explains the early intuition of why developing commerce on the open web was so important

The thought was if we enabled e-commerce we would essentially create a revenue stream for the internet that would be sustainable because it's all well and good to have a set of technologies that allows anyone to freely surf the Internet but if there was not companies who actually provided information and provided businesses on the internet then there would be no future funding and the commercial networks that were competing with us i.e., AOL and MSN would essentially win out due to greater funding.

That is, finding economics that could out-compete private networks was essential to the path to dominance for the principles of the open web. Enabling open networked commerce was that way.

The development of commerce also required memory, per Montulli, “that would allow a website to recognize a user from one visit to the next” without requiring a user to log in.

Today, however, the economics that originally supported the open web are funneled to private networks – companies that have consumer identity and data, principally because they do ask users to log in. Logged in users have well-understood identity and that furnish better user experiences that monetize better in owned experiences and ads. This has concentrated power, and poses a threat to the early visions of a decentralized web.

Today, it seems like history is repeating itself, with today's closed networks not Bell Atlantic, T.C.I., Time-Warner, U.S. West; or AOL and MSN; but Meta, Amazon and Apple. Just as the early web pioneers sought to create open platforms that could compete with the closed networks of the 1990s, we now face a similar challenge in the face of the walled gardens' growing dominance over our collective identities.

A web of free expression

The early pioneers of the internet envisioned a web that would foster competition, innovation, and free expression.

The Electronic Frontier Foundation's 1993 "Jeffersonian Vision" called for guaranteeing

that anyone who, say, wants to start an alternative news network or a forum for political discussion is given an outlet to do so.

The open web made creating such forums possible, but as Montulli recognized, sustainable economics were necessary for these ventures to thrive.

Today, the economics of identity threaten the open web and the early visions of the internet. The Progress and Freedom Foundation's 1994 essay "Cyberspace and the American Dream" argued that "technological progress creates new means of serving old markets, turning one-time monopolies into competitive battlegrounds." The essay envisioned ‘cyberspace’ as a force for competition, with "market after market" being transformed from a "natural monopoly" to one in which "competition is the rule."

"Inexpensive knowledge destroys economies-of-scale."

Yet today, we see the opposite trend: the rise of new natural monopolies, driven by the concentration of consumer identity and data in the hands of a few dominant platforms. While cyberspace has made knowledge about the world inexpensive, it has made knowledge about each other expensive to acquire, manage, and administer - and increasingly controlled by walled gardens.

We were very much against tracking and in favor of privacy. [Our] eureka moment was what if what if we just created an identifier that was only associated with individual websites and was not shared between websites

They could create an identity that allowed websites to remember returning users without log in.

Montulli recounted. Of course as we all know now the internet found a way around.

With technologies within HTTP it definitely allows cookies to be used if a whole group of websites also essentially work together to create … a tracking Network”

The deprecation of third party cookies blocks this behavior.

So what sort of technology can address the natural monopolies over our identity and the economics it accrues while also side-stepping the problems that cookies introduced?

Logged-in Web

There’s tremendous elegance in simplicity.

It’s true that in the early days of the web, the only way sites could remember you was through logging in with a username and password. Montulli explains, “there was no other form of interaction that would allow a website to recognize a user.”

But maybe that’s a good thing. Maybe users should just log in.

Cookies are a mess. They're a privacy and user-agency nightmare. And the data they furnish is expensive and not even that good.

On the other hand, identity with the Logged-in Web is simple. Modern identity support automatic logins or logins in a single tap. Users don’t need to remember which account they used for their last visit – it can be all automatic. No duplicate identities that muddy customer journeys. Our avenues for introducing and representing ourselves are increasingly effortless and humanistic. Soon consumers will be able to login to any site with all their context in just a tap.

This is the vision for the Logged-in Web: a fresh take on cookies. Ari explains the idea on Eric’s podcast:

“And you may say, well that’s a pipe dream. No one will ever log in.

But if you consider the scenario where cookies are deprecated sometime in 2025 and the CPM difference between logged in and non logged in skyrockets … you could see a scenario where [sites] say ‘well I know [requiring logins] is painful but it’s the only way.'

And then it becomes self-perpetuating where more and more [user experience, ads and commerce] go to logged in and less and less to the non-logged in and the economics of the non-logged in become totally infeasible.

And you could end up in a world where it’s not 100%, maybe it’s 50% logged in or higher and that would be very different from the current world.

Our view at Crosshatch is that this shift is a massive opportunity to change how data flows on the internet. With portability laws rising worldwide, users have a growing right to access their data. The costs of non-compliance are high and the largest private networks are moving to comply.

Logging in can happen in a tap. And if you’re going to ask users to log in, why not do it in a way that lets them bring all their context? First party data is increasingly ‘meh.’ Your users have the most data anyway.  

Identity and data deliver the best user experiences and network economics. The gates to consumers wielding that data for whatever purpose they like are opening.

It's time to rise against the natural monopolies that privately capitalize on our identities and embrace open systems that empower us to make our own.

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