In short, it's a lie that ads give people content and services for free:
1. The advertisers who pay web providers get their money from us, added to the prices of other things we consume. There is no free lunch.
2. The overhead cost of advertising is huge and we pay for that too.
3. We pay the opportunity cost of a product that cannot put users first because ad-supported web providers live or die by giving advertisers what they want (and what we want indirectly and secondarily). This includes both the cost of lost privacy as well as business, editorial and design decisions that optimize for advertising revenue. As has been said, they are using us as products more than treating us as their paying customers. Let me restate to be extra clear: WE are the paying customer, but we don't look like that to their finance department.
4. We pay for all the collateral damage of advertising, such as the tremendous amount of link-bait and other garbage that advertising perversely incentivizes.
5. We pay the social costs. Whether or not you agree with the social costs laid out in the above article, I'm sure most can agree democracy and the free market assume people make voting and purchasing decisions based on facts and reason. Advertising undermines democracy[1] and the free market[2]. Advertising is predominantly about manipulation and deceit. I believe the social costs are the most expensive.
Added together, we end users are paying a lot more for "free" product than if we could just straight up pay for it. And even we non-users are paying the social costs and collateral damage.
Ads are simply a sneaky and dishonest way to get at end users' money without them realizing it.
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[This is a condensed version of a more detailed case with reference links that I made here: https://news.ycombinator.com/item?id=7485773]
[1] Do you really need a link for this one? We all know that money often overwhelmingly decides who gets to run in an election, plays a big part in who wins, and influences what legislation they introduce, support or fight.
[2] http://www.chaosisgood.com/2013/03/how-advertising-undermine...