4 ms·

This seems to be the sad reality of many paid services: paying is not a guarantee of freedom from advertisement, only a temporary respite. Being a paying custom

This seems to be the sad reality of many paid services: paying is not a guarantee of freedom from advertisement, only a temporary respite. Being a paying customer is a very juicy datapoint, one that every one of these streaming companies eventually decides to capitalize on.

shiroiuma 3y ago
[flagged]
- avalys 3y ago
  You don’t have to use any of these services! There is plenty of stuff to do for entertainment that is not TV. Sometimes people act on here as if mass-market TV and movies are, like, a basic human right or something. And presume they’re entitled to do whatever is necessary to get access to it. Go read a book!
  - woodruffw 3y ago
    I think the point is not that people have to use these services (this is obvious, I think), but instead that these services have no essential economic incentive to not walk back benefits that subscribers were previously paying for. (This is true in all kind of market segments, but it’s especially perverse in online services: bandwidth and storage get cheaper each year, so why are we walking the hedonic treadmill on paying not to be advertised to?)
ants_everywhere 3y ago
You end up paying in three ways: (1) money (subscription fees), (2) data (you're forced to log in and allow tracking), and (3) the decrease in attention/focus caused by advertising. All three prices can be ratcheted up over time mostly independently of each other. Price increases in (2) and (3) are largely invisible to the user.
- jdewerd 3y ago
  The problem is that in terms of revenue (2) and (3) are tiny compared to (1) because by tipping your hand that you value your time above a pittance, you reveal yourself to be much less cost sensitive, so they charge you a massive premium.
  - woodruffw 3y ago
    This was what I thought too, but ‘ksherlock has provided some links above that suggest the opposite: paid subscribers are less profitable than their ad-viewing counterparts.
    - ants_everywhere 3y ago
      This is what I would have guessed, or otherwise it would be hard to explain why e.g. YouTube stuck with a purely ad-driven model for so long. Also subscribers usually get unlimited content for a flat fee whereas ads-based users pay incrementally for bandwidth and resources consumed. I think it's possibly useful to think of the revenue streams as a form of diversification. For example, there's value in Google diversifying some of their dependence on ad revenue.
      - Brian_K_White 3y ago
        I don't think it's diversification, I think they just have to have the option to point the complainers and regulators at. They don't actually want anyone to use that option any more than they want anyone to use firefox while they pay to keep firefox around.
    - jdewerd 3y ago
      Huh, thanks for the heads up. The situation has evolved since I last saw numbers. That's wild.
ksherlock 3y ago
The problem is: even at a higher price point, the ad-free versions generate less revenue. "“We’re obviously trying with our pricing strategy to migrate more subs to the advertiser-supported tier,” Disney Chief Executive Bob Iger said in August during a call with investors to discuss the company’s quarterly results." "Disney, Netflix and Warner Bros. Discovery have recently said the ad-supported versions of their streaming platforms generate more money per user than their ad-free counterparts, as the advertising revenue more than offsets the lower subscription cost." -- https://www.wsj.com/business/media/netflix-price-increase-actors-strike-792de9be https://www.wsj.com/business/media/netflix-price-increase-ac... "Netflix executives have said that the ad tier brings in more average revenue per user than its $15.49 standard plan." -- https://www.wsj.com/articles/netflix-reworks-microsoft-pact-lowers-ad-prices-in-bid-for-growth-159b359a https://www.wsj.com/articles/netflix-reworks-microsoft-pact-...
- woodruffw 3y ago
  Thanks for those links. This indicates that (1) users consistently undervalue their ad data, or (2) the ad data market is misfunctioning (since so many of these companies go on to spend billions on advertising their own unprofitable services). Or both! The entire situation is ridiculous. We’ve somehow managed to build an even more exploitative user-service relationship than Cable TV.
  - bobthepanda 3y ago
    ads have two functions: to drive more traffic, and to preserve mindshare for existing brands. Coke is not buying ads because you don't know what Coke is, Coke is buying ads so that Pepsi or somebody else's ad doesn't take your mindshare away.
    - woodruffw 3y ago
      Right, but neither of these functions explains the circularity: if Netflix loses money on every paying subscriber versus the "ad watching sucker" demographic, why spend billions of dollars a year[1] advertising your paid plans? (Maybe I'm being too literal here -- it'd be fair to argue that Netflix mostly just advertises their shows, not the plans themselves directly.) [1]: https://www.statista.com/statistics/688525/netflix-ad-expense/ https://www.statista.com/statistics/688525/netflix-ad-expens...
ajkjk 3y ago
The only way out of this is to find a way to make ads not make as much money. Something like a consumer union but we attempt to organize to reduce the ROI for advertising. Boycott things you see ads for, purchase fewer things overall, and of course, relentlessly block ads.
- signatoremo 3y ago
  Advertising has existed ever since commerce was a thing, because of supply and demand mismatch. Boycotting advertising is just nonsense and as virtual signaling as it can get. Ask any business owner. We want our privacy to be respected. We want to prevent false advertising. We can’t and don’t want to ban all advertising.
  - paholg 3y ago
    Maybe not all, but I want to ban most advertising. Ads in public spaces, such as on billboards, buildings, taxis, etc. should be illegal. Being in public is not an agreement to receive advertisement. Any product or service that has advertisements should at least be forced to offer a reasonably-priced paid version. This goes for streaming services as well. This also goes for things like TVs. Why does my TV try to advertise to me? By allowing it, we end up with all products trying to advertise to us, and living in an ad-filled hellscape with no escape. Advertising may have existed as long as commerce, and there may be appropriate forms, but it's getting worse and worse. I don't want to have to "drink a verification can of mountain dew" or keep my eyes open while forced to watch ads in my own room, as in that Black Mirror episode.
  - ajkjk 3y ago
    Speak for yourself.
  - Marsymars 3y ago
    > We can’t and don’t want to ban all advertising. I'm pretty anti-ad, but I agree with this! I don't personally want to experience any ads, but the only ads I want outright banned are those that are effectively shown to me without my consent, and that can't be reasonably avoided - billboards, and PA-broadcast ads on airplanes come to mind. I'm ambivalent about ads in media. If I can't watch/listen to something ad-free, I just won't consume that content.
dehrmann 3y ago
This isn't even close to new. Newspapers and magazines have double dipped for a very long time.
- wkat4242 3y ago
  They don't force you to look at ads for a set amount of time though.
ShadowBanThis01 3y ago
The sad reality is that consumers are ever more spineless. This particular kind of rip-off started years ago when cable companies got away with charging for ad-riddled channels that used to be part of "basic cable." Amazon will probably get away with this, just as Apple got away with removing the headphone jack from its best-selling music player. Watch apologists fall all over themselves to excuse it, and attack those of us who decry rip-offs like it. "You're posting too fast. Please slow down" Then WHY WAS THE REPLY BUTTON ENABLED? There is no excuse for this rudeness. Why are we expected to put up with it, year after year after year? Deliberately stealing from users is NOT OK, EVER. Why does HN do it?

shiroiuma 3y ago

[flagged]

avalys 3y ago
You don’t have to use any of these services! There is plenty of stuff to do for entertainment that is not TV. Sometimes people act on here as if mass-market TV and movies are, like, a basic human right or something. And presume they’re entitled to do whatever is necessary to get access to it. Go read a book!
- woodruffw 3y ago
  I think the point is not that people have to use these services (this is obvious, I think), but instead that these services have no essential economic incentive to not walk back benefits that subscribers were previously paying for. (This is true in all kind of market segments, but it’s especially perverse in online services: bandwidth and storage get cheaper each year, so why are we walking the hedonic treadmill on paying not to be advertised to?)

ants_everywhere 3y ago

You end up paying in three ways: (1) money (subscription fees), (2) data (you're forced to log in and allow tracking), and (3) the decrease in attention/focus caused by advertising. All three prices can be ratcheted up over time mostly independently of each other. Price increases in (2) and (3) are largely invisible to the user.

jdewerd 3y ago
The problem is that in terms of revenue (2) and (3) are tiny compared to (1) because by tipping your hand that you value your time above a pittance, you reveal yourself to be much less cost sensitive, so they charge you a massive premium.
- woodruffw 3y ago
  This was what I thought too, but ‘ksherlock has provided some links above that suggest the opposite: paid subscribers are less profitable than their ad-viewing counterparts.
  - ants_everywhere 3y ago
    This is what I would have guessed, or otherwise it would be hard to explain why e.g. YouTube stuck with a purely ad-driven model for so long. Also subscribers usually get unlimited content for a flat fee whereas ads-based users pay incrementally for bandwidth and resources consumed. I think it's possibly useful to think of the revenue streams as a form of diversification. For example, there's value in Google diversifying some of their dependence on ad revenue.
    - Brian_K_White 3y ago
      I don't think it's diversification, I think they just have to have the option to point the complainers and regulators at. They don't actually want anyone to use that option any more than they want anyone to use firefox while they pay to keep firefox around.
  - jdewerd 3y ago
    Huh, thanks for the heads up. The situation has evolved since I last saw numbers. That's wild.

ksherlock 3y ago

The problem is: even at a higher price point, the ad-free versions generate less revenue. "“We’re obviously trying with our pricing strategy to migrate more subs to the advertiser-supported tier,” Disney Chief Executive Bob Iger said in August during a call with investors to discuss the company’s quarterly results." "Disney, Netflix and Warner Bros. Discovery have recently said the ad-supported versions of their streaming platforms generate more money per user than their ad-free counterparts, as the advertising revenue more than offsets the lower subscription cost." -- https://www.wsj.com/business/media/netflix-price-increase-actors-strike-792de9be https://www.wsj.com/business/media/netflix-price-increase-ac... "Netflix executives have said that the ad tier brings in more average revenue per user than its $15.49 standard plan." -- https://www.wsj.com/articles/netflix-reworks-microsoft-pact-lowers-ad-prices-in-bid-for-growth-159b359a https://www.wsj.com/articles/netflix-reworks-microsoft-pact-...

woodruffw 3y ago
Thanks for those links. This indicates that (1) users consistently undervalue their ad data, or (2) the ad data market is misfunctioning (since so many of these companies go on to spend billions on advertising their own unprofitable services). Or both! The entire situation is ridiculous. We’ve somehow managed to build an even more exploitative user-service relationship than Cable TV.
- bobthepanda 3y ago
  ads have two functions: to drive more traffic, and to preserve mindshare for existing brands. Coke is not buying ads because you don't know what Coke is, Coke is buying ads so that Pepsi or somebody else's ad doesn't take your mindshare away.
  - woodruffw 3y ago
    Right, but neither of these functions explains the circularity: if Netflix loses money on every paying subscriber versus the "ad watching sucker" demographic, why spend billions of dollars a year[1] advertising your paid plans? (Maybe I'm being too literal here -- it'd be fair to argue that Netflix mostly just advertises their shows, not the plans themselves directly.) [1]: https://www.statista.com/statistics/688525/netflix-ad-expense/ https://www.statista.com/statistics/688525/netflix-ad-expens...

ajkjk 3y ago

The only way out of this is to find a way to make ads not make as much money. Something like a consumer union but we attempt to organize to reduce the ROI for advertising. Boycott things you see ads for, purchase fewer things overall, and of course, relentlessly block ads.

signatoremo 3y ago
Advertising has existed ever since commerce was a thing, because of supply and demand mismatch. Boycotting advertising is just nonsense and as virtual signaling as it can get. Ask any business owner. We want our privacy to be respected. We want to prevent false advertising. We can’t and don’t want to ban all advertising.
- paholg 3y ago
  Maybe not all, but I want to ban most advertising. Ads in public spaces, such as on billboards, buildings, taxis, etc. should be illegal. Being in public is not an agreement to receive advertisement. Any product or service that has advertisements should at least be forced to offer a reasonably-priced paid version. This goes for streaming services as well. This also goes for things like TVs. Why does my TV try to advertise to me? By allowing it, we end up with all products trying to advertise to us, and living in an ad-filled hellscape with no escape. Advertising may have existed as long as commerce, and there may be appropriate forms, but it's getting worse and worse. I don't want to have to "drink a verification can of mountain dew" or keep my eyes open while forced to watch ads in my own room, as in that Black Mirror episode.
- ajkjk 3y ago
  Speak for yourself.
- Marsymars 3y ago
  > We can’t and don’t want to ban all advertising. I'm pretty anti-ad, but I agree with this! I don't personally want to experience any ads, but the only ads I want outright banned are those that are effectively shown to me without my consent, and that can't be reasonably avoided - billboards, and PA-broadcast ads on airplanes come to mind. I'm ambivalent about ads in media. If I can't watch/listen to something ad-free, I just won't consume that content.

dehrmann 3y ago

This isn't even close to new. Newspapers and magazines have double dipped for a very long time.

wkat4242 3y ago
They don't force you to look at ads for a set amount of time though.

ShadowBanThis01 3y ago

The sad reality is that consumers are ever more spineless. This particular kind of rip-off started years ago when cable companies got away with charging for ad-riddled channels that used to be part of "basic cable." Amazon will probably get away with this, just as Apple got away with removing the headphone jack from its best-selling music player. Watch apologists fall all over themselves to excuse it, and attack those of us who decry rip-offs like it. "You're posting too fast. Please slow down" Then WHY WAS THE REPLY BUTTON ENABLED? There is no excuse for this rudeness. Why are we expected to put up with it, year after year after year? Deliberately stealing from users is NOT OK, EVER. Why does HN do it?