3 ms·

Excuse my ignorance but where do the advertisers get the money to pay for the content? They get it from me if I buy their product. So instead giving my money to

by jeena 13y ago

Excuse my ignorance but where do the advertisers get the money to pay for the content? They get it from me if I buy their product. So instead giving my money to the advertiser who then gives it to the artist, why wouldn't I just give it to the artist myself (like with Netflix, etc.)? I don't have the numbers but I am quite sure that movies at the theater woudldn't be that much more expensive either. The advertisers don't invest their own money, they invest the money they get from us the customers obviously. And they only can invest as much as we buy, not more. Wouldn't cutting out the middleman save some bugs too?

nemothekid 13y ago
I'm just speculating here but I could think of some reasons why advertising is a better revenue model than direct charging for a studio (also I think the theater model doesn't depend on ads. For ads I mean tv/cable/ota). 1.) Better price discrimination. Instead of 3 people paying $5.99, I could convince an advertiser to advertise 3 different products at different price points. If the advertisements were 100% effective and I got a 10% commission, it could result in one person buying a $500 Louis vuitton bag and another buying a Macy's store brand bag at ($50). That gets me a revenue of $55 compared to $18 if I sold direct. (I know that TV ads don't actually work this way, as you can't track whether a commercial led to a sale of a product) 2.) The advertiser may be willing to pay more for the ad spot than you are for the content. Again speculating here, but if an advertiser is willing to pay $20 per view and you will pay $10, then the studio is incentivised to go the ad route. (I think this is most likely, as people were livid when Netflix had to increase price of their streaming package meaning consumer could be more price sensitive). All in all, I have to believe that advertisers haven't been pissing their money for decades, and that studios aren't so consumer hostile that they would bend infinitely for advertisers. If the charge-the-consumer-directly model actually worked I don't think studios would be so hostile to Netflix, and HBO would likely offer a streaming package that didn't depend on the cable package.

by jeena 13y ago

nemothekid 13y ago

I'm just speculating here but I could think of some reasons why advertising is a better revenue model than direct charging for a studio (also I think the theater model doesn't depend on ads. For ads I mean tv/cable/ota). 1.) Better price discrimination. Instead of 3 people paying $5.99, I could convince an advertiser to advertise 3 different products at different price points. If the advertisements were 100% effective and I got a 10% commission, it could result in one person buying a $500 Louis vuitton bag and another buying a Macy's store brand bag at ($50). That gets me a revenue of $55 compared to $18 if I sold direct. (I know that TV ads don't actually work this way, as you can't track whether a commercial led to a sale of a product) 2.) The advertiser may be willing to pay more for the ad spot than you are for the content. Again speculating here, but if an advertiser is willing to pay $20 per view and you will pay $10, then the studio is incentivised to go the ad route. (I think this is most likely, as people were livid when Netflix had to increase price of their streaming package meaning consumer could be more price sensitive). All in all, I have to believe that advertisers haven't been pissing their money for decades, and that studios aren't so consumer hostile that they would bend infinitely for advertisers. If the charge-the-consumer-directly model actually worked I don't think studios would be so hostile to Netflix, and HBO would likely offer a streaming package that didn't depend on the cable package.