5 ms·

Stackoverflow, Advertising and the Ethics of a Free Lunch

44 points by panic 17y ago

bootload 17y ago
"... So how does a 'free' service pay for itself? ..." Missed the obvious of replicating the service for foo (verticals) & charge for the codebase: cf http://moms4mom.com/about http://moms4mom.com/about
- mistermann 17y ago
  I think this is the most important but totally unmentioned fact....I think SO is going to make its money from reselling the underlying engine. Its really quite a strange anomaly...the whole Q&A thing is not new by any means, but I must say Jeff has made the user experience so nice that I think its possible that some sites that couldn't have existed before might now be able to pull it off (its hard to build a big enough network to make a community self sustaining....good software makes it that much easier). Yes, they have a lot of work to do to make it truly vertical, and not disrupt anyone in the process, but I think thats where their real $ is going to come from. I've sent stackexhange several emails, trying to get into the beta program early, even trying to pay an extra fee for premiere service...I am more than willing to pay the ~$1000 per month fee so I can get up and running now....but no dice it seems. Anyways, back to the article.....really, anyone that is technical (geeky) enough that can and would block ads using a script....those people wouldn't be the types to buy software from the advertisers on SO anyways (and I'm sure the advertisers know this),,,so really, I think its just a bunch of hullaboo about nothing consequential.
  - bootload 17y ago
    "... I've sent stackexhange several emails, trying to get into the beta program early ..." You had to get in pretty early to get the beta badge ~ http://www.flickr.com/photos/bootload/2781240756/in/set-72157614753445371/ http://www.flickr.com/photos/bootload/2781240756/in/set-7215... "... I am more than willing to pay the ~$1000 per month fee so I can get up and running now....but no dice it seems. ..." Having said that why not build an alternative?
    - DrJokepu 17y ago
      I supppose because it would cost more time and money to build an alternative of the same quality from scratch? Seriously though, three people was working on that site almost full time for more than a year now. That's about 600-650 workdays. A decent junior developer (the cheapest programmer who could possibly do it) earns at least $200 a day. That's $120000 worth of wages. Which means, you will have to use this software for more than 10 years to justify writing an alternative, and we haven't even considered any additional future development.
      - cschwarm 17y ago
        Then, don't start from scratch: http://code.google.com/p/soclone/ http://code.google.com/p/soclone/ http://github.com/cnprog/CNPROG/tree http://github.com/cnprog/CNPROG/tree
netsp 17y ago
All sorts of things about this are off: Market segmentation is the time-honoured technique of asking people how much money they have when they want to buy something rather than telling them what it costs, meaning what it costs is a function of how much money they have. What you call segmentation is actually called parallel pricing. In most digital goods and services (high capital cost, low marginal cost), these can get jumbled up. Parallel pricing pisses people off. Segmentation doesn't. If you are not sure exactly which one you are dealing with try to figure out the goal. The goal of parallel pricing is to maximise revenue/profit from a fixed number of sales by charging closer to the maximum people are willing to pay without losing those not willing to pay that much. The goal of segmentation is usually to sell more by giving people options that are worth more to them, or at least are better price/value-wise. Segmentation doesn't require not giving high value customers access to low value goods. People doing A will usually call it B. If the Internet has taught us nothing else, it has taught us that: 1. Advertising pays for otherwise free services; 2. People don’t like advertising; and 3. Advertising works. Actually, I would argue that we knew that before the internet, now we're not so sure.
- barrkel 17y ago
  Segmentation certainly pisses people off who just need that one feature that's only available in the higher version. Think of Stack Overflow and Windows Server's memory limits; memory is dirt cheap, but Windows won't let you use it all until you pony up the extra money to buy a whole bunch of other features you don't need.
  - netsp 17y ago
    That is parallel pricing or price differentiation.
pingswept 17y ago
I think I might be in the minority regarding adblockers. I have no sympathy for someone who runs a web server that serves both interesting content and ads (or indirectly requests ads from another server), but is disappointed when my computer only downloads the interesting content. If you don't want my computer to receive the data you send it, then stop responding to my HTTP requests. I think the typical counter-argument is that somehow I have tacitly agreed to look at ads because other people have historically looked at ads on the internet. But go further back, and there were no ads on the internet. I was there in 1994, and your ads weren't. It's your expectations or the behavior of other people that have misled you, not some activity on my part. It's true that site developers are counting on the ads for revenue-- I understand that. But I'm just not willing to pay. If the site's free, fine. If I have to look at ads, sorry, no deal. Stop responding to my HTTP requests, and I'll be fine. Edit: I guess I do feel a little sympathy for someone who hopes to make a living off an ad-supported site, but only because I generally like people and hope their businesses succeed. I just don't find the "tacit agreement" argument compelling. (I'd be open to other, more compelling arguments.) Does anyone know of an adblocker that negotiates with servers? Like "TCP SYN but only if no ads", "TCP SYN ACK No, you must take the ads", "TCP FIN"?
- ellyagg 17y ago
  You are not in the minority, and I find it breathtakingly hard to believe that you think you are in the minority. Virtually everyone in the circles I run in (reddit, hackernews, etc.) believe the same as you. If you want a true minority opinion, read on. From a practical standpoint, I don't care. Leeching can't be stopped and any web business obviously has to understand that. Clearly, businesses are able to be built despite leechers. What I find incredible is that ads are really that much of a nuisance for people. I've never had the slightest difficulty completely tuning out any manner of ad. I sometimes get the feeling that folks who go out of their way to ad block are actually a little bit offended by banner ads in general. And that makes me think they're a little bit creepy. In real life, no one would repeatedly take favors from someone and not feel a certain obligation. What I find even more incredible is the pure, uniform rationalization that comes from communities that otherwise pride themselves on their logic. Would you take a cookie from one of those cardboard vendors some office buildings have and not pay? "If they didn't want me to eat their cookies, they should have stopped me from taking one." It's just that the "crime" is so trifling and anonymous. No single raindrop blames itself for the flood. Like I said, I don't care about ad blocking per se. It's the collective and willful rationalization that irritates me. (Incidentally, your edits imply that you would be willing to automaticaly be blocked from sites that serve ads. That's nice, and makes you consistent, but the vast, vast majority of ad blockers would not be willing to live with an Internet hamstrung to that extent.)
marcusbooster 17y ago
I don't mind ads in general, but in Stackoverflow's particular case I find them ugly, jarring, and out of place. It does not make for a very pleasant browsing experience in my opinion.
shin_lao 17y ago
1/I don't even understand why people complain about ad blocking. It's part of the equation. Some people don't read the ads, some block it. It's nowhere near stealing. It's like offering a "pay as you like" service and complain that people don't pay or not enough. Well, if you have a precise idea of how much you should charge then change the price tag my friend. Stop the hypocrisy. 2/A service will be more successful if it's "free". If you cannot manage to charge money for your service, it means the perceived value is not that much and you don't have a working business model. Stop complaining. Rethink your business model. Adapt. 3/A site with advertisement is not free. In exchange of reading content I deem useful, I will read content that might lead to a business transaction in the future. 4/I might be willing to pay a small yearly fee for an ad-free service like Stackoverflow. The deal could be "if you pay a certain amount of money, you don't get ads". 5/AFAIK the content of Stackoverflow is written by people who don't get paid. It's a community web site. People feel that they own a part of the content and therefore shouldn't suffer advertisement (which is why, I guess, you get less aggressive advertisement as your reputation go up, unless I'm mistaken I have more than 3,000 reputation and don't see any advertisement). 6/People mentally block ads on web sites. There was a link about this on HN a while ago, can't find it though.
- stcredzero 17y ago
  3/A site with advertisement is not free. Why is the mental friction of a micropayment so much worse than having to ignore (or block) ads? It's all in our heads. I think people fear micro-payments because it's something they don't know and because there is no cap. A rectangle on their web pages with obnoxious stuff they didn't want -- this they understand, so they live with it or block it. Unfortunately, this results in the ad market being able to deliver the sub-population of users too lazy or not savvy enough to block ads, and this is not the most lucrative subset! Micropayments as Ads are very indirect and fraught with problems and ambiguities. I wish irrational emotional factors weren't blocking a well needed Refactoring!
  - shin_lao 17y ago
    Because micropayment requires me to do at least 10 actions with the hidden thought "is this secure?" whereas blocking ads is more around like three actions. More important, when I pull out my credit card, this is exactly the same action than when I buy for 300 € worth of stuff on a web site.
Tichy 17y ago
The only reason I see why people would complain about adblockers is rather destructive: because I have to suffer (seeing ads), everybody else should have to suffer, too. Other than that, I really don't understand - does the advertiser get his value if I see the ad even though I hate it? Seems to me rather the opposite: since I hate ads enough to bother installing an ad blocker, seeing an ad might actually induce negative feelings towards that company in me (perhaps psychology can prove me wrong, but my feeling is that ads can affect me in a negative way). Also, since I sure as hell will never click on those ads, showing them to me anyway will bring the clickthrough rate of the site down. So it might also be a net loss for the site owner, who has to sell the ads for less. Looking at an ad is not the same as paying for something. It is not a productive action. By giving somebody money, something productive has taken place (I produced something to earn that money, receiver can pay somebody else to produce something). Looking at an ad on the other hand is purely destructive - my time was simply wasted, I did not produce anything in the time I wasted with the ad.
- stcredzero 17y ago
  Looking at an ad is not the same as paying for something. It is not a productive action. The market doesn't perfectly distinguish this. If someone if willing to pay for your looking at an ad, then it is productive according to the market. Hence, someone is paid. Does this reflect reality? Nothing is perfect, even markets.
  - Tichy 17y ago
    I'd argue that a lot of information asymmetric enters into that. If the market knew that the ad makes me hate the company, they would not pay for it.
    - stcredzero 17y ago
      There's always some asymmetric information. If there weren't markets wouldn't exist.
nobody_nowhere 17y ago
A couple of points from someone who works in the online ad business: 1. People who block/remove ads are a tiny, tiny minority (right now) 2. If you're that opposed to ads, I'd just as soon not show you one. It costs money to show it -- something like $0.00003-9/impression. That adds up. 3. A site which doesn't perform at all -- e.g., no one clicks, all ads are blocked, etc -- will eventually cease to make money from ads and will be forced to seek another revenue model.
stcredzero 17y ago
What if society realigned the meaning of "free?" Some big box store might announce that something is "free at any one of our stores." "Free" can be a big draw. A lot of people will go to get the "free" item. However, to get this "free" item, they have travel to get it. In the US this probably means burning some petroleum in their car, but when gasoline is cheap enough, most people in the US don't think too much about having to get in the car. In times like that, being able to drive somewhere and pick something up without paying is effectively "free." For most people, "Free Software" works somewhat like this. It's "free" and they really don't think of what they pay for network access. Micro-payments could work like this. If user expectations could be aligned that way, "free" could mean only for the cost of the download. (If you dig enough, for most people "free" just means: please don't make me pay more than $35 a month for doing everything I do on the Internet.) In other words, it's all in our minds. It's all just how we think of it. Markets are a great way to regulate something ubiquitous. We'd probably benefit from market forces being brought to bear on the Internet in a more direct way. For one thing, it would make the ad-blocking debate moot. Ads are just a very indirect form of micropayment.
JulianMorrison 17y ago
If you are trying to suggest where I can get a product I want, then I want to see it. If you are trying to infect me with mind-viruses or slap my face with offensive content or waste my time, then I'll block you. If I can't tell when I'll get the good or the bad, I'll block you. Consider it a Darwinian selection pressure.
hxa7241 17y ago
Advertisers are paying on the expectation of return. And that expectation is based entirely on contingency. They have no claim at all on the public's co-operation. Have they paid the public to watch the ads? No. They merely expect that they will. But of course those contingencies can change, such as with use of ad-blockers. Anyone who uses ad-blockers is perfectly free to do so. And the advertisers have no 'right' whatsoever to complain. For a commercial organisation to feel affronted that its customers don't do what it wants is, at the very least, complacency. If a community wants to agree to fund something, let it do so clearly.

44 points by panic 17y ago

"... So how does a 'free' service pay for itself? ..." Missed the obvious of replicating the service for foo (verticals) & charge for the codebase: cf http://moms4mom.com/about http://moms4mom.com/about

mistermann 17y ago
I think this is the most important but totally unmentioned fact....I think SO is going to make its money from reselling the underlying engine. Its really quite a strange anomaly...the whole Q&A thing is not new by any means, but I must say Jeff has made the user experience so nice that I think its possible that some sites that couldn't have existed before might now be able to pull it off (its hard to build a big enough network to make a community self sustaining....good software makes it that much easier). Yes, they have a lot of work to do to make it truly vertical, and not disrupt anyone in the process, but I think thats where their real $ is going to come from. I've sent stackexhange several emails, trying to get into the beta program early, even trying to pay an extra fee for premiere service...I am more than willing to pay the ~$1000 per month fee so I can get up and running now....but no dice it seems. Anyways, back to the article.....really, anyone that is technical (geeky) enough that can and would block ads using a script....those people wouldn't be the types to buy software from the advertisers on SO anyways (and I'm sure the advertisers know this),,,so really, I think its just a bunch of hullaboo about nothing consequential.
- bootload 17y ago
  "... I've sent stackexhange several emails, trying to get into the beta program early ..." You had to get in pretty early to get the beta badge ~ http://www.flickr.com/photos/bootload/2781240756/in/set-72157614753445371/ http://www.flickr.com/photos/bootload/2781240756/in/set-7215... "... I am more than willing to pay the ~$1000 per month fee so I can get up and running now....but no dice it seems. ..." Having said that why not build an alternative?
  - DrJokepu 17y ago
    I supppose because it would cost more time and money to build an alternative of the same quality from scratch? Seriously though, three people was working on that site almost full time for more than a year now. That's about 600-650 workdays. A decent junior developer (the cheapest programmer who could possibly do it) earns at least $200 a day. That's $120000 worth of wages. Which means, you will have to use this software for more than 10 years to justify writing an alternative, and we haven't even considered any additional future development.
    - cschwarm 17y ago
      Then, don't start from scratch: http://code.google.com/p/soclone/ http://code.google.com/p/soclone/ http://github.com/cnprog/CNPROG/tree http://github.com/cnprog/CNPROG/tree

netsp 17y ago

All sorts of things about this are off: Market segmentation is the time-honoured technique of asking people how much money they have when they want to buy something rather than telling them what it costs, meaning what it costs is a function of how much money they have. What you call segmentation is actually called parallel pricing. In most digital goods and services (high capital cost, low marginal cost), these can get jumbled up. Parallel pricing pisses people off. Segmentation doesn't. If you are not sure exactly which one you are dealing with try to figure out the goal. The goal of parallel pricing is to maximise revenue/profit from a fixed number of sales by charging closer to the maximum people are willing to pay without losing those not willing to pay that much. The goal of segmentation is usually to sell more by giving people options that are worth more to them, or at least are better price/value-wise. Segmentation doesn't require not giving high value customers access to low value goods. People doing A will usually call it B. If the Internet has taught us nothing else, it has taught us that: 1. Advertising pays for otherwise free services; 2. People don’t like advertising; and 3. Advertising works. Actually, I would argue that we knew that before the internet, now we're not so sure.

barrkel 17y ago
Segmentation certainly pisses people off who just need that one feature that's only available in the higher version. Think of Stack Overflow and Windows Server's memory limits; memory is dirt cheap, but Windows won't let you use it all until you pony up the extra money to buy a whole bunch of other features you don't need.
- netsp 17y ago
  That is parallel pricing or price differentiation.

pingswept 17y ago

I think I might be in the minority regarding adblockers. I have no sympathy for someone who runs a web server that serves both interesting content and ads (or indirectly requests ads from another server), but is disappointed when my computer only downloads the interesting content. If you don't want my computer to receive the data you send it, then stop responding to my HTTP requests. I think the typical counter-argument is that somehow I have tacitly agreed to look at ads because other people have historically looked at ads on the internet. But go further back, and there were no ads on the internet. I was there in 1994, and your ads weren't. It's your expectations or the behavior of other people that have misled you, not some activity on my part. It's true that site developers are counting on the ads for revenue-- I understand that. But I'm just not willing to pay. If the site's free, fine. If I have to look at ads, sorry, no deal. Stop responding to my HTTP requests, and I'll be fine. Edit: I guess I do feel a little sympathy for someone who hopes to make a living off an ad-supported site, but only because I generally like people and hope their businesses succeed. I just don't find the "tacit agreement" argument compelling. (I'd be open to other, more compelling arguments.) Does anyone know of an adblocker that negotiates with servers? Like "TCP SYN but only if no ads", "TCP SYN ACK No, you must take the ads", "TCP FIN"?

ellyagg 17y ago
You are not in the minority, and I find it breathtakingly hard to believe that you think you are in the minority. Virtually everyone in the circles I run in (reddit, hackernews, etc.) believe the same as you. If you want a true minority opinion, read on. From a practical standpoint, I don't care. Leeching can't be stopped and any web business obviously has to understand that. Clearly, businesses are able to be built despite leechers. What I find incredible is that ads are really that much of a nuisance for people. I've never had the slightest difficulty completely tuning out any manner of ad. I sometimes get the feeling that folks who go out of their way to ad block are actually a little bit offended by banner ads in general. And that makes me think they're a little bit creepy. In real life, no one would repeatedly take favors from someone and not feel a certain obligation. What I find even more incredible is the pure, uniform rationalization that comes from communities that otherwise pride themselves on their logic. Would you take a cookie from one of those cardboard vendors some office buildings have and not pay? "If they didn't want me to eat their cookies, they should have stopped me from taking one." It's just that the "crime" is so trifling and anonymous. No single raindrop blames itself for the flood. Like I said, I don't care about ad blocking per se. It's the collective and willful rationalization that irritates me. (Incidentally, your edits imply that you would be willing to automaticaly be blocked from sites that serve ads. That's nice, and makes you consistent, but the vast, vast majority of ad blockers would not be willing to live with an Internet hamstrung to that extent.)

marcusbooster 17y ago

I don't mind ads in general, but in Stackoverflow's particular case I find them ugly, jarring, and out of place. It does not make for a very pleasant browsing experience in my opinion.

shin_lao 17y ago

1/I don't even understand why people complain about ad blocking. It's part of the equation. Some people don't read the ads, some block it. It's nowhere near stealing. It's like offering a "pay as you like" service and complain that people don't pay or not enough. Well, if you have a precise idea of how much you should charge then change the price tag my friend. Stop the hypocrisy. 2/A service will be more successful if it's "free". If you cannot manage to charge money for your service, it means the perceived value is not that much and you don't have a working business model. Stop complaining. Rethink your business model. Adapt. 3/A site with advertisement is not free. In exchange of reading content I deem useful, I will read content that might lead to a business transaction in the future. 4/I might be willing to pay a small yearly fee for an ad-free service like Stackoverflow. The deal could be "if you pay a certain amount of money, you don't get ads". 5/AFAIK the content of Stackoverflow is written by people who don't get paid. It's a community web site. People feel that they own a part of the content and therefore shouldn't suffer advertisement (which is why, I guess, you get less aggressive advertisement as your reputation go up, unless I'm mistaken I have more than 3,000 reputation and don't see any advertisement). 6/People mentally block ads on web sites. There was a link about this on HN a while ago, can't find it though.

stcredzero 17y ago
3/A site with advertisement is not free. Why is the mental friction of a micropayment so much worse than having to ignore (or block) ads? It's all in our heads. I think people fear micro-payments because it's something they don't know and because there is no cap. A rectangle on their web pages with obnoxious stuff they didn't want -- this they understand, so they live with it or block it. Unfortunately, this results in the ad market being able to deliver the sub-population of users too lazy or not savvy enough to block ads, and this is not the most lucrative subset! Micropayments as Ads are very indirect and fraught with problems and ambiguities. I wish irrational emotional factors weren't blocking a well needed Refactoring!
- shin_lao 17y ago
  Because micropayment requires me to do at least 10 actions with the hidden thought "is this secure?" whereas blocking ads is more around like three actions. More important, when I pull out my credit card, this is exactly the same action than when I buy for 300 € worth of stuff on a web site.

Tichy 17y ago

The only reason I see why people would complain about adblockers is rather destructive: because I have to suffer (seeing ads), everybody else should have to suffer, too. Other than that, I really don't understand - does the advertiser get his value if I see the ad even though I hate it? Seems to me rather the opposite: since I hate ads enough to bother installing an ad blocker, seeing an ad might actually induce negative feelings towards that company in me (perhaps psychology can prove me wrong, but my feeling is that ads can affect me in a negative way). Also, since I sure as hell will never click on those ads, showing them to me anyway will bring the clickthrough rate of the site down. So it might also be a net loss for the site owner, who has to sell the ads for less. Looking at an ad is not the same as paying for something. It is not a productive action. By giving somebody money, something productive has taken place (I produced something to earn that money, receiver can pay somebody else to produce something). Looking at an ad on the other hand is purely destructive - my time was simply wasted, I did not produce anything in the time I wasted with the ad.

stcredzero 17y ago
Looking at an ad is not the same as paying for something. It is not a productive action. The market doesn't perfectly distinguish this. If someone if willing to pay for your looking at an ad, then it is productive according to the market. Hence, someone is paid. Does this reflect reality? Nothing is perfect, even markets.
- Tichy 17y ago
  I'd argue that a lot of information asymmetric enters into that. If the market knew that the ad makes me hate the company, they would not pay for it.
  - stcredzero 17y ago
    There's always some asymmetric information. If there weren't markets wouldn't exist.

nobody_nowhere 17y ago

A couple of points from someone who works in the online ad business: 1. People who block/remove ads are a tiny, tiny minority (right now) 2. If you're that opposed to ads, I'd just as soon not show you one. It costs money to show it -- something like $0.00003-9/impression. That adds up. 3. A site which doesn't perform at all -- e.g., no one clicks, all ads are blocked, etc -- will eventually cease to make money from ads and will be forced to seek another revenue model.

stcredzero 17y ago

What if society realigned the meaning of "free?" Some big box store might announce that something is "free at any one of our stores." "Free" can be a big draw. A lot of people will go to get the "free" item. However, to get this "free" item, they have travel to get it. In the US this probably means burning some petroleum in their car, but when gasoline is cheap enough, most people in the US don't think too much about having to get in the car. In times like that, being able to drive somewhere and pick something up without paying is effectively "free." For most people, "Free Software" works somewhat like this. It's "free" and they really don't think of what they pay for network access. Micro-payments could work like this. If user expectations could be aligned that way, "free" could mean only for the cost of the download. (If you dig enough, for most people "free" just means: please don't make me pay more than $35 a month for doing everything I do on the Internet.) In other words, it's all in our minds. It's all just how we think of it. Markets are a great way to regulate something ubiquitous. We'd probably benefit from market forces being brought to bear on the Internet in a more direct way. For one thing, it would make the ad-blocking debate moot. Ads are just a very indirect form of micropayment.

JulianMorrison 17y ago

If you are trying to suggest where I can get a product I want, then I want to see it. If you are trying to infect me with mind-viruses or slap my face with offensive content or waste my time, then I'll block you. If I can't tell when I'll get the good or the bad, I'll block you. Consider it a Darwinian selection pressure.

hxa7241 17y ago

Advertisers are paying on the expectation of return. And that expectation is based entirely on contingency. They have no claim at all on the public's co-operation. Have they paid the public to watch the ads? No. They merely expect that they will. But of course those contingencies can change, such as with use of ad-blockers. Anyone who uses ad-blockers is perfectly free to do so. And the advertisers have no 'right' whatsoever to complain. For a commercial organisation to feel affronted that its customers don't do what it wants is, at the very least, complacency. If a community wants to agree to fund something, let it do so clearly.