So That's Where the Internet Money Comes From

McKinsey Quarterly recently conducted a study, which found that the Web is currently running a "€100 billion annual surplus."  (The article about the study is available here, free registration required.)  The study surveyed Web users in Europe and the United States and concluded that "Web use" is worth €150 billion a year.  They then subtracted €30 billion in consumer payments for services and subscriptions and €20 billion in "pollution" consumers experience, such as privacy fears, pop-up ads, etc., to arrive at the number.  

The article proposed three possible way internet economics could shift: (1) increased service costs (e.g., more subscriptions, charges for premium content); (2) increased advertising; and  (3) other monetization plans.  These are not especially groundbreaking conclusions, but the assessment of the Web surplus is interesting.  It sure helps explain Goldman's recent valuation of Facebook and indicates that another internet boom (though perhaps more modest than the first one), is around the corner.  For the economy, that's probably a good thing. For individual investors, it's likely a very mixed bag. 

--JPF