3 ms·

Blame consumers for this. If a company sells a service for $10/mo ad-free and $9/mo completely loaded with ads, most people will pick the latter plan. Why won't

by paxys 2y ago

Blame consumers for this. If a company sells a service for $10/mo ad-free and $9/mo completely loaded with ads, most people will pick the latter plan. Why won't they offer it then?

cmonreally123 2y ago
Because if they did the 9$ ads would plummet in price paid to the platform because it implies to the advertisers the consumers have no purchasing capability and may be price sensitive or else they would shell out the extra dollar. If they don't offer it and still sell adds they can demand advertisers pay the premium as the consumer has disposable income to buy the service and is likely price insensitive since they are now paying for something that was free.
- Analemma_ 2y ago
  Is this actually true? It's one of those bits of "telephone wisdom" I've heard passed from commenter to commenter on Hacker News (and Slashdot before that) for as long as I can remember, but nobody ever seems to have a primary source for it, it's always been a "just trust me" bit of knowledge.
  - otabdeveloper4 2y ago
    It isn't true. Advertisers think in broad social groups. ("25-44 women with kids", "men with college education", etc.)
sabbaticaldev 2y ago
because someone will offer the same for 9usd without ads, hopefully
jknoepfler 2y ago
Citation? That is absolutely not true for me, and strikes me as obviously false, but I'm willing to be wrong.
- dublinben 2y ago
  https://www.statista.com/statistics/1309326/video-streaming-subscriber-version-us/ https://www.statista.com/statistics/1309326/video-streaming-...
godelski 2y ago
Show me the market. Seriously. There’s a lot of spaces where the options are pigeonholed. Where the middle option, if it exists, exists to ladder, not to provide actual value. The problem is you’re using Econ 101 but real world economics is quite a bit more complicated and nuanced
- kazinator 2y ago
  Spolsky's Camels and Rubber Duckies
AnthonyMouse 2y ago
The people most likely to pay the extra $1 are the people who will watch the most, and then they'd lose more than $1/mo from them in ad impressions. The real question is, why don't they have a completely free plan supported entirely by ads -- don't even try to get a huge premium for the ads, just sell lots of them, even if it's a 1:1 time relationship between ads and content. And then have another plan where you pay money and have zero ads. Because the latter scheme should be the most profitable. To begin with you open up the market to people who wouldn't pay you at all but would watch ads, so you get more viewers, and on top of that it's effectively try before you buy where the trial requires watching ads, which means you can stay on it as long as you like because the service is still making money. People start watching a show and get tired of seeing ads so they subscribe, when they otherwise would never have started. Then you don't charge $10/mo for no ads, you charge $20, which is worth it to a lot of people because there are so many ads in the free version, and for the people it isn't you still make money from them by showing them lots of ads.
- erehweb 2y ago
  Completely free works sometimes (e.g. Facebook), but not always - the free plan might cannibalize lots of people who would otherwise pay significant amounts of money.
- paxys 2y ago
  Free plans don't work when the cost of providing a service is high. Google, Facebook and the like can happily give away their products for free and lose money on the bottom N% of users, because it still amounts to pennies. Netflix has high bandwidth and content licensing costs that scale per user, so they need some barrier to entry.
  - notpushkin 2y ago
    Could they offset bandwidth by using torrents? I mean, it works for the pirates, even though there is no way to enforce people keep seeding (apart from private trackers maybe).
    - 2y ago
hgomersall 2y ago
No, what happens is people pick the $10 plan and then sometime later, when all the competition has disappeared, they yank on the enshittification handle, and start adding ads to the service and not reduce the price.
- Mindwipe 2y ago
  Not increasing the price every year with inflation is reducing the price.
  - hgomersall 2y ago
    Oh, they do that too.
manuelmoreale 2y ago
> Blame consumers for this. I don't because in this case that's not an option. Is either free with shitty ads or paid with "better" ads.

by paxys 2y ago

Blame consumers for this. If a company sells a service for $10/mo ad-free and $9/mo completely loaded with ads, most people will pick the latter plan. Why won't they offer it then?

cmonreally123 2y ago

Because if they did the 9$ ads would plummet in price paid to the platform because it implies to the advertisers the consumers have no purchasing capability and may be price sensitive or else they would shell out the extra dollar. If they don't offer it and still sell adds they can demand advertisers pay the premium as the consumer has disposable income to buy the service and is likely price insensitive since they are now paying for something that was free.

Analemma_ 2y ago
Is this actually true? It's one of those bits of "telephone wisdom" I've heard passed from commenter to commenter on Hacker News (and Slashdot before that) for as long as I can remember, but nobody ever seems to have a primary source for it, it's always been a "just trust me" bit of knowledge.
- otabdeveloper4 2y ago
  It isn't true. Advertisers think in broad social groups. ("25-44 women with kids", "men with college education", etc.)

sabbaticaldev 2y ago

because someone will offer the same for 9usd without ads, hopefully

jknoepfler 2y ago

Citation? That is absolutely not true for me, and strikes me as obviously false, but I'm willing to be wrong.

dublinben 2y ago
https://www.statista.com/statistics/1309326/video-streaming-subscriber-version-us/ https://www.statista.com/statistics/1309326/video-streaming-...

godelski 2y ago

Show me the market. Seriously. There’s a lot of spaces where the options are pigeonholed. Where the middle option, if it exists, exists to ladder, not to provide actual value. The problem is you’re using Econ 101 but real world economics is quite a bit more complicated and nuanced

kazinator 2y ago
Spolsky's Camels and Rubber Duckies

AnthonyMouse 2y ago

The people most likely to pay the extra $1 are the people who will watch the most, and then they'd lose more than $1/mo from them in ad impressions. The real question is, why don't they have a completely free plan supported entirely by ads -- don't even try to get a huge premium for the ads, just sell lots of them, even if it's a 1:1 time relationship between ads and content. And then have another plan where you pay money and have zero ads. Because the latter scheme should be the most profitable. To begin with you open up the market to people who wouldn't pay you at all but would watch ads, so you get more viewers, and on top of that it's effectively try before you buy where the trial requires watching ads, which means you can stay on it as long as you like because the service is still making money. People start watching a show and get tired of seeing ads so they subscribe, when they otherwise would never have started. Then you don't charge $10/mo for no ads, you charge $20, which is worth it to a lot of people because there are so many ads in the free version, and for the people it isn't you still make money from them by showing them lots of ads.

erehweb 2y ago
Completely free works sometimes (e.g. Facebook), but not always - the free plan might cannibalize lots of people who would otherwise pay significant amounts of money.
paxys 2y ago
Free plans don't work when the cost of providing a service is high. Google, Facebook and the like can happily give away their products for free and lose money on the bottom N% of users, because it still amounts to pennies. Netflix has high bandwidth and content licensing costs that scale per user, so they need some barrier to entry.
- notpushkin 2y ago
  Could they offset bandwidth by using torrents? I mean, it works for the pirates, even though there is no way to enforce people keep seeding (apart from private trackers maybe).
  - 2y ago

hgomersall 2y ago

No, what happens is people pick the $10 plan and then sometime later, when all the competition has disappeared, they yank on the enshittification handle, and start adding ads to the service and not reduce the price.

Mindwipe 2y ago
Not increasing the price every year with inflation is reducing the price.
- hgomersall 2y ago
  Oh, they do that too.

manuelmoreale 2y ago

> Blame consumers for this. I don't because in this case that's not an option. Is either free with shitty ads or paid with "better" ads.