Internet & broadbandPhorm's Webwise online advert-targeting service, something for which the term 'controversy-dogged' could have been invented, experienced two major setbacks this week, finding itself dropped by the ISPs BT and TalkTalk.

The Webwise service tracks users' online surfing habits and uses this information to deliver relevant adverts. The service has come under heavy criticism from privacy campaigners such as the Open Rights Group, even though Phorm claims it 'anonymises' the information so that web users are impossible to identify.

Many would feel that Phorm is finally getting its just desserts after treating internet users and data privacy activists with an attitude that ranged from obfuscation to contempt.

Webwise initially came to our attention when it emerged that BT had run trials of the service without consulting users. Later trials of the service were conducted more openly, but the move had already set the antagonistic tone in which the debate surrounding Webwise would be conducted.

One of Phorm's strangest PR moves was the creation of a truly bizarre website, StopPhoulPlay.com, in which it supposedly set the facts straight about Webwise and the criticisms it's faced. Yet the site's methods ranged from juvenile name-calling (referring to opponents as "privacy pirates", "angry activists" and "media mouthpieces") to tabloid-esque name-and-shaming of repeated critics, as if consistently stating opposition to something makes a journalist an obsessive smear artist.

The future of the internet

Yet the Phorm case is an important and complex one in the way that it relates to the future of internet business. The web is at a crossroads; while news, headed by Rupert Murdoch, ponders a switch to paid-for content, other branches are heading down the free route, with Google's free services (now including, as you may have heard, a free Chrome OS) accompanying the gradually strengthening open-source movement.

Assuming we can't rely on a band of aristocratic gentlemen bloggers, however, content has to be paid for somehow. Which means the model of free online content only works if it's accompanied by effective advertising. Most web users I know happily use free websites but would consider themselves extremely unlikely to 'fall for' the adverts on them - an understandable attitude, but one that doesn't put any money in advertisers' pockets.

You get what you pay for

They say that the only problem with democracy is that you always end up electing a politician - by which they mean that forcing people to compete for your vote means only the sort of people who are good at winning votes get elected, rather than people who are necessarily good at performing administrative roles.

In the same way, I guess, the free online model means you create a slightly unsavoury process of natural selection. The companies that succeed and will continue to provide you the user with content will not simply be the ones that provide good content; it'll be the ones that are good at leveraging advertising revenue (although good content may be a factor in that).

There's no such thing as a free lunch, you know.