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> Consumers can pay for ad-free video subscription services like Spotify Premium or Hulu—why can’t they in search or social networking? Why are these markets st

> Consumers can pay for ad-free video subscription services like Spotify Premium or Hulu—why can’t they in search or social networking? Why are these markets stuck? The article has very pragmatic observatiosn but this is not one of them. This won't work, people won't pay with money for what they can easily pay with their targetting data. Private data is worthless in any other context than advertising, there is no opportunity cost. I also think it didn't touch on advertisers themselves, who bear a big responsibility for this situation. Agencies like IAB have done less than nothing to fix this situation, they ve made things worse. We need more ethical ad platforms, but we also need more ethical advertisers.

huac 7y ago
The richest people are the ones who advertisers really want to reach (in the article, the hypothetical beer ad sells at $2 CPM vs the hypothetical private jet ad at a $2000 CPM). At the same time, the richest people are the ones who can afford to pay whatever subscription fee FB or Google would charge. I don't think that there is a lack of demand, it's just that the people who make up that demand create an adverse selection problem, the users who would opt out are the ones who make your platform valuable. I don't think that antitrust regulation solves this particular adverse selection problem. It's certainly difficult to compete against the established giants, for many reasons, but this theoretical opting out is definitely not some consumer benefit that we can expect.
- Deimorz 7y ago
  It's not really the same thing you're talking about at all, but I think there's also an interesting conflict of this type between where the largest sites are getting their user growth from now, and the users that are most valuable as advertising targets to them. The larger sites (Facebook, Twitter, etc.) are pretty close to saturation in North America and a lot of other English-speaking countries. There just aren't many people left here that don't know what Facebook is and might still be convinced they should start using it regularly. Almost all of the growth comes from other parts of the world, but the users from those locations are worth far less in terms of advertising revenue. If you look at Facebook's Q2 2019 presentation [1], their average revenue per user from US & Canada is now $33.27, Europe $10.70, Asia-Pacific $3.04, and Rest of World $2.13. One US/Canada user is worth more to them than 15 from "Rest of World". However, 74% of their Monthly Active Users are from Asia-Pacific/Rest-of-World now, and that only corresponds to 28% of their revenue. I don't really have a particular point I'm trying to make, I just think it's interesting. These companies worry a lot about showing continued user growth (or at least not shrinking), but the growth sources now don't have anywhere near the same value as the old ones. [1]: https://s21.q4cdn.com/399680738/files/doc_financials/2019/Q2/Q2-2019-Earnings-Presentation-07.24.2019.pdf https://s21.q4cdn.com/399680738/files/doc_financials/2019/Q2...
  - buboard 7y ago
    continued growth is good for their stock. It will of course reach a tipping point where the sheer amount of users will start yielding net negative revenue at which point there will be a reckoning
- robocat 7y ago
  "Facebook made an average of $6.18 off each user in Q4". But your point is that price discrimination really matters. The same thing with whales playing "free" games. Gotta agree with your main point. > The richest people are the ones who advertisers really want to reach (in the article, the hypothetical beer ad sells at $2 CPM vs the hypothetical private jet ad at a $2000 CPM) Rubbish. The 1000x $2 eyeballs is definitely worth money to the beer sellers, independently to the 1x "$2000" eyeball for the private jet advertiser (ignoring profit margin etc). Note, from the article: "The private jet ad might sell at a $200 CPM as opposed to the $2 CPM beer ad targeted to an anonymous user" not sure why you changed value to 2k.
Donzo 7y ago
This is absolutely correct. Not only is an individual's private data nearly worthless, but they can protect it for free simply by using the Brave browser or other adblocking/tracking solutions. People often claim that they would pay for web content if it were somehow easier or if micropayments worked better or something. I'm not sure that I believe them.
- pdkl95 7y ago
  > I'm not sure that I believe them. You don't have to take their word that people would pay. They already are paying. Millions[1] of people go out of their way[2] to pay creators monthly or per-work. However, a lot of that "web content" needs to realize the actual value of their content might be ~$0. Advertising distorted the market; a lot of people were able to extract revenue greater than the actual "market value" of their content. [1] https://graphtreon.com/patreon-stats https://graphtreon.com/patreon-stats [2] While Patreon isn't very hard, having to take the extra step of vising (and maybe making an account) a 3rd party service is not a proper "micropayment" system. The goal of micropayments is to make trivial to immediately pay for something without any extra friction (perhaps a button/whatever in the browser to send a tip/donation, no need to worry about Paypal/Patreon/etc)
  - buboard 7y ago
    > a lot of that "web content" needs to realize the actual value of their content might be ~$0 If people are spending time on your site, you are providing value to them (excluding scams, of course). It's never 0. > Advertising distorted the market; a lot of people were abl It did not. The percentage of GDP that companies spend in advertising is historically the same for more than 100 years. What happened with the internet is that Google and later FB progressively sucked up ALL the profits, leaving literally scraps to publishers. And over time they are eating more and more value from publishers because all their competitors have vanished (there is currently NO competitor to adsense). Publishers are seing their ad CPMs being lower , despite the fact that online audiences are growing fast, and the shift to online ads has accelerated explosively in the past few years. Patreon and subscriptions have their place, but they are not scalable. Users will revolt if they have to pay 30 yearly subscriptions for reading 30 articles , and are forced to pass from an spanish inquisition to unsubscribe. Subscriptions can also be bad for the quality of content: If creators try to appeal to their patrons/subscribers instead of trying to reach as wide audiences as possible, they tend to become more partisan and biased ; you get what you incentivize. micropayments would indeed be far better especially if they were anonymous, fire-and-forget payments. crypto payments would be ideal for that but its not gonna happen because they are untaxable
asdff 7y ago
I at least would pay good money every month for a google suite free of all the bullshit they've been adding the last ten years. Give me relevant search results again please take my money.

huac 7y ago

The richest people are the ones who advertisers really want to reach (in the article, the hypothetical beer ad sells at $2 CPM vs the hypothetical private jet ad at a $2000 CPM). At the same time, the richest people are the ones who can afford to pay whatever subscription fee FB or Google would charge. I don't think that there is a lack of demand, it's just that the people who make up that demand create an adverse selection problem, the users who would opt out are the ones who make your platform valuable. I don't think that antitrust regulation solves this particular adverse selection problem. It's certainly difficult to compete against the established giants, for many reasons, but this theoretical opting out is definitely not some consumer benefit that we can expect.

Deimorz 7y ago
It's not really the same thing you're talking about at all, but I think there's also an interesting conflict of this type between where the largest sites are getting their user growth from now, and the users that are most valuable as advertising targets to them. The larger sites (Facebook, Twitter, etc.) are pretty close to saturation in North America and a lot of other English-speaking countries. There just aren't many people left here that don't know what Facebook is and might still be convinced they should start using it regularly. Almost all of the growth comes from other parts of the world, but the users from those locations are worth far less in terms of advertising revenue. If you look at Facebook's Q2 2019 presentation [1], their average revenue per user from US & Canada is now $33.27, Europe $10.70, Asia-Pacific $3.04, and Rest of World $2.13. One US/Canada user is worth more to them than 15 from "Rest of World". However, 74% of their Monthly Active Users are from Asia-Pacific/Rest-of-World now, and that only corresponds to 28% of their revenue. I don't really have a particular point I'm trying to make, I just think it's interesting. These companies worry a lot about showing continued user growth (or at least not shrinking), but the growth sources now don't have anywhere near the same value as the old ones. [1]: https://s21.q4cdn.com/399680738/files/doc_financials/2019/Q2/Q2-2019-Earnings-Presentation-07.24.2019.pdf https://s21.q4cdn.com/399680738/files/doc_financials/2019/Q2...
- buboard 7y ago
  continued growth is good for their stock. It will of course reach a tipping point where the sheer amount of users will start yielding net negative revenue at which point there will be a reckoning
robocat 7y ago
"Facebook made an average of $6.18 off each user in Q4". But your point is that price discrimination really matters. The same thing with whales playing "free" games. Gotta agree with your main point. > The richest people are the ones who advertisers really want to reach (in the article, the hypothetical beer ad sells at $2 CPM vs the hypothetical private jet ad at a $2000 CPM) Rubbish. The 1000x $2 eyeballs is definitely worth money to the beer sellers, independently to the 1x "$2000" eyeball for the private jet advertiser (ignoring profit margin etc). Note, from the article: "The private jet ad might sell at a $200 CPM as opposed to the $2 CPM beer ad targeted to an anonymous user" not sure why you changed value to 2k.

Donzo 7y ago

This is absolutely correct. Not only is an individual's private data nearly worthless, but they can protect it for free simply by using the Brave browser or other adblocking/tracking solutions. People often claim that they would pay for web content if it were somehow easier or if micropayments worked better or something. I'm not sure that I believe them.

pdkl95 7y ago
> I'm not sure that I believe them. You don't have to take their word that people would pay. They already are paying. Millions[1] of people go out of their way[2] to pay creators monthly or per-work. However, a lot of that "web content" needs to realize the actual value of their content might be ~$0. Advertising distorted the market; a lot of people were able to extract revenue greater than the actual "market value" of their content. [1] https://graphtreon.com/patreon-stats https://graphtreon.com/patreon-stats [2] While Patreon isn't very hard, having to take the extra step of vising (and maybe making an account) a 3rd party service is not a proper "micropayment" system. The goal of micropayments is to make trivial to immediately pay for something without any extra friction (perhaps a button/whatever in the browser to send a tip/donation, no need to worry about Paypal/Patreon/etc)
- buboard 7y ago
  > a lot of that "web content" needs to realize the actual value of their content might be ~$0 If people are spending time on your site, you are providing value to them (excluding scams, of course). It's never 0. > Advertising distorted the market; a lot of people were abl It did not. The percentage of GDP that companies spend in advertising is historically the same for more than 100 years. What happened with the internet is that Google and later FB progressively sucked up ALL the profits, leaving literally scraps to publishers. And over time they are eating more and more value from publishers because all their competitors have vanished (there is currently NO competitor to adsense). Publishers are seing their ad CPMs being lower , despite the fact that online audiences are growing fast, and the shift to online ads has accelerated explosively in the past few years. Patreon and subscriptions have their place, but they are not scalable. Users will revolt if they have to pay 30 yearly subscriptions for reading 30 articles , and are forced to pass from an spanish inquisition to unsubscribe. Subscriptions can also be bad for the quality of content: If creators try to appeal to their patrons/subscribers instead of trying to reach as wide audiences as possible, they tend to become more partisan and biased ; you get what you incentivize. micropayments would indeed be far better especially if they were anonymous, fire-and-forget payments. crypto payments would be ideal for that but its not gonna happen because they are untaxable

asdff 7y ago

I at least would pay good money every month for a google suite free of all the bullshit they've been adding the last ten years. Give me relevant search results again please take my money.