The extraordinary personal value of the web: $140 billion is the tip of the iceberg

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How much value do you get from the web? A lot more than you pay for it.

We may quibble about the cost of bandwidth and online services, and in some cases we should, but the reality is the value we get from connectivity and web-based services is massive.

Earlier this year McKinsey & Co released research titled The Web’s €100 billion surplus (registration required). The key findings are shown below.


Source: McKinsey

In essence the research shows that there is €150bn of value to consumers of the internet in Europe and North America, from which it deducts the €30bn paid for services, plus the €20bn effective cost of advertising “pollution” and data privacy risks, leaving €100bn (approx. $140bn) of “consumer surplus”.

These figures in fact massively underestimate the true surplus value of the web. Another methodology would be to find out what people would be prepared to pay not to be cut off from these services. In the case of email and social networks, that would be an enormous amount. We will always have free or low-cost online services, however that hides the extraordinary value they give us.

These figures are miniscule compared to, for example, the lower costs of almost all goods and services as a result of information transparency and more efficient business processes. While a Skype video call is free, how much value is there from connecting grandparents and grandchildren at will? The relevant comparison is a situation many people remember, when an international call to loved ones was something you might do once a year on Christmas Day, and could pay $100 for.

Let us not take the web for granted, and neglect the extraordinary personal value it gives us.