Everyone is hurt by “Do Not Track” and other well-meaning privacy initiatives that  hurt the economy, reduce the number of online options consumers have for news, entertainment and research and could even change pricing of mobile phone, Internet, television and other plans.

Most business leaders would agree that any short-term gains generated by compromising customer privacy would be offset by reputation damage and may eventually drive an organization out of business.  But consumers may not understand what happens when they install ad blocking software or take advantage of Firefox’s proposed “do not track” flag.

By informing companies that they don’t want their activities tracked or they don’t want to see advertising on websites or smartphones, consumers will block the activity that allows organizations to provide free and subsidized services.   Google said today that they would make code available for Internet developers to embed this opt-out mechanism in future browsers, but even The Washington Post conceded that doing so might cause repeated or less relevant ads.

Smart advertisers aren’t tracking you–they are tracking the activities of a computer session to serve better, more relevant advertising.  That tracking leads to better advertising targeting which means the companies sponsoring the information and connectivity are more profitable and can continue offering free services.

Imagine a world where you pay a membership fee for access to a search engine or for Facebook or to watch a video. Advertising pays for all of these services and more, including subsidized telephone services, broadband pricing initiatives and a global economy where a small business in Europe can compete with a multinational conglomerate in Los Angeles for the same consumers in South America.

You must know that companies have to be paid.  Someone pays the employees, pays for the lights to be on, pays for the things we all enjoy now free. Forget free applications and consider how your daily surfing habits would change.  Email would likely remain free, but would probably have more restrictive sizes that wouldn’t allow pictures or files to be transmitted.  Even browsers are advertising or product supported. Two popular browsers, Mozilla’s Firefox and Google’s Chrome, are directly supported through donations from Google, an organization that creates almost all of its revenue from online advertising.  You don’t pay $29.95 to buy browser software as you were expected to during the web’s nascent days.

And that’s true in so many situations because online advertising is affordable and effective. I know that because I help small businesses and non-profits generate more revenue from their online advertising efforts.  That profit means they can create new jobs, keep prices stable a longer time and fund philanthropic activities.

Today’s Wall Street Journal print edition featured a story about Mozilla’s “do not track” future capability on the front page of its Marketplace section.  Further inside the section and no coincidence was an article about The New York Times’ plans to begin charging consumers for access via Amazon’s Kindle and the Apple iPad. The Journal called this “the biggest test to date of consumers’ willingness to pay for news they’re accustomed to getting free.”

Providing bandwidth, content and creating websites costs money.  When consumers realize that some of their favorite activities may now be unavailable for free, it may be too late to restore some of those services.  Online ads are effective thanks to the tracking mechanisms that make ads appeal to the proper audiences. If ads become random and less efficient, you just may pay for the privilege of telling law-abiding companies that you don’t want to be tracked while organizations who don’t follow the practice or are not based in the United States will do as they please. Ad blocking and “do not track” initiatives are bad for America’s businesses and worse for America’s consumers who use free Internet services.