Advertising cannot maintain the Internet
evonomics.com
evonomics.com
They might trust the economic advice along side the article too. But when have newspapers ever taken the stance that advertising should be informational and beneficial for the user. If people don't click it's not just the article that is inappropriate, the advert is too.
People don't want to pay for quality journalism despite what journalists and media like to tell themselves.
The problem is that most information finds it's way to the internet for free. We are no longer depending on the distribution channels that the newspapers used to had, to bring information to us.
That leaves us with investigative journalism but even that is slowly taking the backseat and it's not enough for people to want to pay for it.
I'm not sure that's really true. We simply have no option. There is no quality journalism online, there are a bunch of crooked people trying to push different agendas, and an unfortunately large group of people willing to pretend whichever trash rags are pushing the agendas they like are "quality".
I don't know if I'd quite go that far.
I don't remember when the phenomenon started, but a lot of online platform shifted from news organizations to news orgs with blogs. The first instance I noticed was some years ago when the WSJ, Bloomberg, or some similar organization had a noticeable decline in the quality or articles that had been shared in my circles. It wasn't that the quality was down. They had integrated user blogs that required no clout to contribute. The only way to distinguish between an actual article and the no-name blog contributor was a /pages (or something similar) in the URL. At that point, you may as well have been reading a Medium post.
I do think there is plenty of quality journalism online. I think one of the main issues is that the blog side of organizations has been deeply intertwined with the actual news content. We are so used to blog spam being passed as an official news story from the companies we trusted.
This is a real problem, I agree. That said, there are some online news outlets that at least try to offer a better class of journalism. The Intercept is one such outlet:
What most people mean with quality journalism really is stuff like investigative journalism or opinion pieces by people like Thomas Friedman. And there is plenty of that online.
The idea of quality journalism beyond that really doesn't exist in anything but the journalists heads.
That's the single most important function of the free press and they more or less stopped.
Losing celebrity gossip, reworded press releases, and vastly misinterpreted scientific research is not a sacrifice we should care about.
Saying 'not my job' is fine if you accept you might not have a job.
It used to exist because we didn't have other means to get to this information and a lot of issues were so complicated and the access to those who could explain them limited.
These days, this is all open on the platform. There are experts far better than the ones your local newspaper can get a hold of, there are people far closer to the issues than journalist who help expose much of the corruption. Today most things leave a digital trail behind it that hackers far smarter than any investigative journalist can be, get access to.
I would say in many ways journalism have been freed from it's former obligations. Not because it isn't good enough but because it isn't needed anymore.
But will people pay for it? You cannot pay your rent or student loans with exposure.
If there was "free food" but after a while it was watered down so much and had so many additives that it just made you sick and left you hungry, why wouldn't you go back to normal food? Yes, it's infinitely more expensive than "free", but getting sick from it and still being hungry also has all sorts of hidden costs. So, where's the free market with people operating in their own interest, right?
That sounds like "the proof is left as an exercise for the reader."
But just because there is a big distance between here and there doesn't mean there's not a "there" there, and if people cared enough, they would find a way. Yes, it's vague, but this island seems to be sinking, the next one looks better to me; that's all I can say from here. People liking instant gratification over attention spans and smart long-term decisions is not something to adapt to, much less exploit, it's something that we will either deal with, or something that will deal with us.
And in regards to micro-payments I think it would also help if anonymity wasn't under attack so much. When people seriously drive towards abolishing cash in the physical world, of course introducing the equivalent of cash on the web can't really work; I'm not saying it would be necessarily trivial otherwise, but there's a really hostile climate towards it on top of it. It's also a political and social problem, not just a technical one.
It is true that many pay for digital subscriptions but I did not interpret the "will people pay for it?" as just a non-zero number of subscribers.
Instead, "will people pay for it?" is often interpreted as shorthand for "would enough people pay enough money to make it economically viable?" (E.g. good salaries for journalists, strong profits for the publisher, etc.)
Yes, those websites you mentioned are attracting paying subscribers to avoid paywalls but as far as I can tell, nobody is making significant profits from it. For example, NYT digital subscriptions are growing -- and ad revenue from online is growing -- but the profits (if any) are not replacing the lost profits from traditional print ads. For online subscriptions, many publishers are losing money or barely breaking even. No newspaper including NYT has solved the economic puzzle of digital subscriptions bringing the type of money that 1990s paper classifieds + ads brought. So far, the answer to "will people pay for it?" appears to be "no".
From what I can tell, the kind of publishing that works very well on subscriptions is industry-specific for a specialized audience. For example, the NationalJournal (costs $7000 to $25000) for following blow-by-blow legislation in Washington DC or Gartner Group (~$20k/yr) for business analysis news. On the other hand, the mass audience journalism like NYT and USAToday is replicated on too many other free sources. As a result, mainstream publishing will always depend more on heavy-handed advertising rather than subscriptions for the majority of revenue.
This is huge. For a story that anyone can cover ("Cat Stuck in Tree!"), there's mass-market competition where a hundred players can run their own versions of the same story. If one of those players is willing to work for free (or Reddit karma, or 'exposure', or whatever else), then the value of that information drops to ~$0.
Mass market journals used to get by on marginal costs, but those are ~0 too now. What they have left to offer is writing quality and accuracy, but its increasingly looking like those aren't worth what they cost. And the quality dilution of high-end journalism has made the problem worse, by driving journalists into ever-more-direct competition with the free sources they can't possibly outprice.
Now we're really getting to the heart of it: in an economic environment where growth is valued above all else, including actual value, publishers can't accept that they might have to make less money.
Honestly, though, I am highly skeptical that for-profit businesses controlling our media is even a good thing. Look at NPR, which is supported entirely by donations and grants: they don't make much money, and incidentally they do some of the best reporting I've come across.
Ultimately, I think the NYT and its ilk aren't "failing" at subscription models, they're failing because they can't compete with a myriad of more local news sources. It's hard to maintain a business when you have to send reporters to Cairo to report on Arab spring or to Tokyo to report on the Fukushima reactors, and local readers can get eyewitness reports from Redditors and Twitterers. It doesn't help that major news sources are increasingly untrustworthy and sensationalized. Ads are allowing them to delay the inevitable, but I think the end result will be decentralization. There's no reason for me to get my news about the Arab spring from the NYT when Al Jazeera has reporters who have been on the ground there for decades and have far more context; there's no reason for me to get my news about Fukushima from the NYT when I can read the English version of the Japan Times. News Aggregators make this easier. And incidentally, there are plenty of small news sources operating on subscription, pay-per-article, PWYW, donation, or other business models.
The marginal cost of providing content is now essentially 0, and there are few-to-no good models for how to handle capital costs when they can't be subtly rolled into marginal prices. That doesn't mean any of the existing solutions are acceptable.
A paywall subscription to the Boston Globe will run me (long term) $7/week. That's $0.30/week less than they would charge me for a daily physical paper.
Full access to Buzzfeed, meanwhile, is 100% free and still isn't worth what it costs.
So yes, I'll complain. I'll complain that I have a choice between (malware-serving) advertisements, value-erasing sponsored content, and usurious paywalls that start at monthly subscriptions.
I know this isn't an easy problem. Microtransactions (pay per article) are unappealing to consumers. Tipping (Patreon) isn't a stable revenue stream for large organizations. And no matter what you paywall, someone will put it up for free. Even academic journals haven't beaten that reality. But for all that, I still don't have to like the existing answers.
But in order to make that a strong argument, you are implicitly assuming that the marginal cost of the physical version is significant. It's probably easy to argue that it is significant compared to the marginal cost of online distribution, but is it significant compared to the capital costs?
In the same vein, what are you including in your model of marginal cost? Are you including printing press and datacenter operations in your mental calculation, or only the cost of distribution itself? Because with those, the marginal costs are much closer to eachother than without -- although they're possibly still an order of magnitude apart, I really have no idea.
Useless articles with clickbait titles apparently as a lot of refunds.
Indeed, if online "journalism" crashes and burns, it will improve the web not endanger it.
I pay my mobile provider $40/month for 2GB Data
I pay $100/Yr to a hosting service for my ad-free web site and email for my business which will always be there while my business is running (as will the ad-free web sites of most other businesses I know of).
In addition to the above I pay various donations and subscriptions to certain sites I like and buy almost exclusively on line.
It seems to me there is plenty of money to keep the internet going without advertising.
To the multitude of news/media/blogs/click-bait sites duplicating the same content and that rely on advertising for their business model then good luck to you all, unobtrusive advertising was and still is ok with me, but because of the bad-apples it is now in your face and I ad-block everything.
Things subsidized by ads like YouTube and myriad other distractions are a bonus. If they were to disappear no one would be dropping their internet connection. Trust me, with bandwdth as it is, free video is not going to disappear.
All things considered I think non-commercial websites like Wikipedia or Internet Archive are actually the most valuable ones. And even without ads they will not disappear because passionate dedicated people create them for non-commercial reasons. And the cost for the individual to store data and publish online keeps decreasing.
The internet has heaps of inherent value that has nothing to do with advertising. Especially with today's computing power and bandwidth. It's like long distance calling anywhere in the world for a set monthly fee. And anyone can write software to send and receive over the network. Sign me up. For life.
Anyone who used the internet in the late 80's early 90's before commercial activity was permitted, when bandwidth was limited and expensive, knows this.
By all means argue for ads if it's your cash cow - try you best to save your golden goose, but spare us the absurd arguments that ads are what give the internet value.
Indeed. Some would argue they reduce the value of the internet.
That said I do worry about the future of the Internet.
I think for example the game industry has been ruined by in-app payments, because of the "free to play, pay to win" model. It's only natural that this evolved of course, as the attraction towards "free" stuff is irresistible. We are so irrational in our decision making process, that we'd rather try out something free that will frustrate us endlessly until we pay. I also think the music industry is ruined by streaming services. Yeah, we had radio stations before these, but those were valuable for discovering music, after which you ended up buying vinyl records, magnetic tapes, cassettes, CDs, etc. And people owned those after buying them. The concept of collecting music is fading away. Even once respectable software is moving in that direction. My favorite subject being 1Password, which is moving to a subscription based model, managing to be both rentware and expensive.
It's just evolution on one hand, but right now the pendulum is not swinging towards freedom. The main problem is that people will pirate if given the opportunity. This says something about how unfair the copyright law is of course, but the response of the industry isn't to make stuff free as in freedom, but to rob people of the opportunity to pirate, punishing and locking-in honest customers in the process. And how are they doing that? Well, they cheat and they lobby and they play mind tricks and they push hostile software and devices on us, etc. And we gladly accept all of that, with a smile on our faces, in the name of grandmas everywhere that need handholding.
And going back to ads, you might hate ads, you might not think they provide value, but alternative business models are coming and I believe they'll be far worse. And that's because, judging by recent industry trends, there's no reason to suspect otherwise.
It's like paying to keeps the light on at the grocery store, but not for the food. Sure, it makes for a good place to Counter Strike/Paintball, but not so much for content.
Though if you're spending your time on non-news-sites and the like, maybe you're fine without the newstand.
Heh, maybe if you live in the US or some other place with high wages.
Curious how many seem to think money is literally the lifeblood that the internet runs on.
"Money" as we know it (i.e. the dollar) is a legacy centralized paper-based information system.
The internet is a decentralized/distributed electric information system.
The internet runs on electricity, not paper. Electricity is a renewable resource.
Some questions:
- Do I have to pay in advance, before knowing that I enjoyed an article?
- How would I feel skimming in 30 seconds through an article that I had to pay for and move on to the next one? This is something I do routinely. Would I keep paying for that or would I totally skip paid-for articles?
- Why should I pay for that NYT article and not for a free one from Reuters with about the same content? Should we differentiate between plain news, opinions, investigative journalism?
I understand that somebody writing a blog gets paid by something else and the journalist gets paid by that very article, but the journalist is competing for reader time (time, not news) with so many other things, from instant messaging to casual browsing.
To answer the question... 100k readers * 5 cents = 5k. Too much or too little? Did the article took a hour, a day, a month, a year to write? If it's a hour, no way, even 1 cent would be too much. If it's a month it's spot on, maybe even cheap. But competition from free news, even the ones reporting on that article, is hard to beat.
News is one of the more obvious examples that things become less valuable as more people have access. If I am the only person in a room to have read an article, I am more interesting at a party. If everyone read it, I might as well be discussing the weather. If I find out about an earnings report a microsecond before other investors, that news is much more valuable to me than it is to them.
Journalists also have to deal with instances where weeks of effort failt to uncover anything worth writing about. The patron/artist model might be the only way to support individual journalists. It might turn out that journalism looks a LOT like private investigation or corporate espionage.
Now with the quality of stuff going downway spiral and my dev salary allowing me to pay, I could be potentially paying for quality content if a good, seamless micropayments standard emerged.
I think ideal smooth, frictionless micropayments solution could be integrated on the browser level. It is hard a problem due to UX considerations, fraud (clickjacking) etc. but imagine this:
There's a UI control built-in with the browser that is a button like 'pay 0.05$ for this article' (amount and some payment metadata embedded in the HTML page). The payment method is controlled somehow by the browser. On Android it caould be maybe integrated with Play Store payments, which already allows me e.g. to add a fee to my ISP phone/internet invoice.
For security, the payments would not be instant, but require an interaction with a browser built-in special page that lists to whom you pay how much and make you verify/correct it ('will pay 0.30c to NYT for this and that article and 0.15c to WSJ for that, proceed?'). You will get a notification from browser once in a while.
With such model it is voluntary micropayments though which may not seduce big players though.
Consider the nyt sells their cheapest digital subscription for $0.60/day. Why on earth should they price articles for less than that, considering you probably aren't going to read an article every day? They certainly don't want to cannibalize their subscribers already paying $0.60/day. And note that keeping eg a reporter in Egypt is expensive.
Further, even if you reply that they're only getting 5 cents for the ads you see (they get more: probably $100+ cpms for pmp ads), they can't afford to trade one-for-one: the people most likely to pay not to see ads are often the ones who advertisers most want to advertise to. ie people with disposable income.
I'd imagine the NYT would need $2+ per article for the economics to work for them. And quite possibly much more.
I'd wager most people who read the NYT's online content aren't subscribers. It's possible that they could generate more money by charging a smaller per article cost compared to what they generate from $0.60 per subscriber.
I'd charge $5+ for the article. Again, you also have to avoid cannibalizing subscription revenue.
$5 will almost buy a paperback book of several hundred pages that will keep you occupied for at least a day or two.
Text is cheap
There are tons of content creators today, mostly artists, who nevertheless give away their work "for free". It's not rocket science how they do this, there are numerous different models for making it work. And some of them are millionaires. At the simplest you can use a pledge drive model, or patreon, where folks who want to pay can and folks who don't or can't pay don't. This has kept tons of public radio and tv stations in business for decades, for example.
Another model is to do up-front crowd funding for projects. There are tons of these sorts of projects where the end production is available to everyone for free. There's little reason why journalists can't rely on such models (as indeed some have already).
Those are just some among many business models, some of which are already being employed by content creators on the internet.
just like I'm now commenting that he's wrong, if this gets enough votes, should he sends the proceeds of the article to me?
internet content now is forums, user generated videos, etc. useless entertainment journalism is dead not because advertisement can't pay the bill. because it's dead.
For example, the mobile app ecosystem (the only large scale experiment we've run in online media since the web) started with a pay-for-use business model in the form of paid apps. While this worked for a while, it quickly gave way to free apps supported by advertising or other business models. Today, unless you are a game, it is almost impossible to build a business using pay-for-use exclusively. Reversing to a free model was forced by the low cost of entry into the market and resulting commoditization of mobile apps. You can't charge for something if a dozen other people will offer it for free.
I'm not a huge supporter of online ads and I do think the industry needs to improve. However, we continue to see that it is the only stable economic model for online media considering the volume and diversity the model needs to cover. Until someone shows something else working at scale, let's not throw away the only thing that is working.
If that's true, and at the same time people dislike adverts enough that a significant proportion will refuse to interact with them or even block them, then the market won't generate enough money to pay for the production of those apps. In the short term people will pay to make those apps by subsidising them with investment money (and lose it all if they don't make any money back), but in the long term we simply won't have people making the apps.
At that point the market will be underserved, customers who have a demand for the product will start to pay, and the pay-for business model starts working, driven by revenue rather than DAUs and ad impressions.
There's no reason to believe the end for advertising means the end of media. There is a demand for the products, and suppliers will continue to provide such products. What's needed is a working business model that both sides of the market are happy with. That doesn't appear to be advertising-lead.
It is advertising-driven but I maintain some standards which my readers have appreciated: ads must relevant, not animated, and they are self-hosted. At this point I don't think advertisers have had any issues with those rules and because of my repeat customers, I believe they get the results they are looking for.
It might be possible to charge readers, but I'm more interested in trying out good advertising practices instead.
The site loaded very quickly and the top menu worked fine with JavaScript disabled. The ads in the right sidebar aren't explicitly marked as ads but it's pretty obvious what they are. I don't mind visiting a site like this and seeing a mix of original content and ads, all of which are relevant.
If more sites followed you lead here, more people like me would see ads. And if they upped their technical game and used server logging to measure visits instead of outsourcing it to third-party analytics providers, they would have a more complete picture of who is visiting their site.
ad supported ≠ free
Ads being a huge privacy issue, I prefer to stay away from ad supported. Then again the mobile app ecosystem experiment is flawed as people like me saw it was a trap and stayed away from it, so the results are biased because they miss the people who actually care about privacy. The only mobile ecosystem I experimented with was getting apk from f-droid then loading them manually on a smartphone that was never online (no wifi, no bluetooth, no 3G or later)
Sadly the content creators of the net have generally embraced Patreon instead. I get that Patreon is nice because it gives them consistent income, but it seems like the monthly subscription to a single artist approach is too coarse for me to buy into.
I don't remember the last time I saw an ad against my will, and if I actually saw one, I think my brain filtered it just by the power of my revulsion. That said, I am aware that it works at a subconscious level not always like you want but the antidote is to fully use conscious processes in suspicious mode when buying something, isn't it?
So, let them pay the internet? If not, you really need your product to have a value that exceed its digital form, like you can see with Steam who appeal to players by connecting games to social. Or you need to be really pedagogic and make the purchase an active act of support.
Blendle is on the right direction with centralization + micro-payments but it should add a social layer where users could build another public identity with their stories listings, allowing them to comment, creating thematic feeds, make them addicted with superficial achievements, like I said: extra value other than just paying for something digital. I am not saying that's what I want.
The later point might be right, but only likely to be tested if there is an advertising bust. At least Brin links to this (http://idlewords.com/2015/11/the_advertising_bubble.htm).
There is a pretty simple reason for this: All the embedded players (credit card processors, and banks) don't have the desire to deal with the extremely high volume and low (near zero) margin business this would create for them.
Institutions who produce content aren't high on MOST users list of places to give money to when there are plenty of ways to get said product for FREE... You want me to give you $5 today so I can spend $0.03 of it on some article. Maybe I forget about it (good for you) or you loose it (bad for me) and then I have to fight to get it fixed (making this a money loosing proposition on both sides).
The greed and avarice, of content producers and advertisers, destroyed what could have been a workable solution (ads), I have no faith that any micropayment platform or what ever else you can cook up is going to work unless it puts USERS FIRST.
I understand how content producers can be blamed for the state of internet advertising but I don't understand why the advertisers are also implicated. It's the content producers who manufacture and sell the advertising product. If an advertiser doesn't buy the product his competitor will.
How does malware get into ad's, the publishers didn't put it there: http://www.extremetech.com/internet/220696-forbes-forces-rea...
Meanwhile the industry itself calls ad blocking "immoral": http://www.adweek.com/news/technology/iab-chief-blasts-adblo...
There is this gem linked from the article where some of them admit it might be their fault: http://www.adweek.com/news/technology/iab-pivots-ad-blocking...
The bigger issue is probably the one that Clay Shirky offered years ago. Mental transaction costs. If I have to decide up-front whether an article is worth reading for a nickel (or whatever), I'm generally going to pass. At best, I'm going to have to think about clicking and that injects a lot of friction into the process.
If you cant figure out how to make money off the net without using ads, you have bigger problems.
Why not let me pay twice what they get from the advertisers to completely disable ads?
Google has some program like this for awhile anyways, but they never promised zero ads, just less.
* no unified marketplace means you have to buy a variety of memberships.
* no established micro-transaction provider means costs are going to be above minimum credit card transaction fees which makes multiple memberships expensive.
* ad block is free.
If you're an established brand, you can count on some degree of good will. People will pay for the NYT, the WSJ, and the Economist. They'll pay for the LWN for a similar reason. But for BuzzFeed? Probably not. And for Random Site K, not a chance. I mean, would _you_ pay to use SpeedTest.net?
Because the people who opt out will be the people who it's most valuable to advertise to. The people who'd opt out are almost certainly worth much more than 2x the average user. The amount you'd have to charge to make this work is probably reasonably significant.
Google aggregates small $1 charity donations in One a Day, and then periodically bills you for a few weeks worth of donations. I don't see why individual companys couldn't provide the same with micro-payments if they were federated so one service would allow people to micro pay on any site supported by a federated partner.
That is in fact the main fallacy. I "read" about 50 articles per day. That's 18250 per year. If my attention is worth $100 per year and half of that goes towards articles I read, that's not 5 cents per article but 0.27 cents.
Some people think .05 per article is low when Netflix provides unlimited movies for $10/mo.
Netflix recognizes that the cost of distribution has dropped out of sight. Publishing needs to do the same.
Usable micropayments and customers paying for online articles will not emerge simply as a result of sufficient hand-wringing. What will make micropayments happen isnot disenfranchised journalists or charity thereupon by techno-utopians. Instead it will come from something with much different and forward-looking goals, like Bitcoin. Bitcoin actually has the properties to make micropayments viable in a way that anything resembling traditional economic payments simply cannot because of overhead (especially considering fraud). However Bitcoin still has to cross the chasm to mainstream usage before we can even dream of such benefits trickling down to online journalism, and I doubt it will because of the next problem...
Content is cheap! The article misattributes the state of online content as caused by the "original sin" of starting advertising, as if that decision happened in a vacuum. But of course from the very beginning the web dramatically lowered the cost of publishing and distribution. Initially there was at least a technical barrier to entry, but that has come down over time as well to the current state of Medium, Facebook, Instagram. The reason people expect free content is not because someone decided it had to be ad-supported, but because having an audience is the first step towards any type of monetization. Once you have an audience you can leverage it in all sorts of ways, some involving charging (eg. The Economist) and some involving branding/funnel-building (eg. Signal vs. Noise), but most people do not, and therefore there will always be a stream of people ready to put out free content just to get noticed.
The fact that this dynamic is killing journalism as we know it is not going to change any incentives or behavior. It's not enough to say "all we need is X to save journalism", you have to explain who is going to build X, why they will do it, and why will users adopt it. I don't believe that enough people are bothered by the current state of affairs that getting rid of advertising, or paying journalists directly will resonate in any meaningful way. That doesn't mean people won't pay for content—obviously they do pay for content—but you have to give them something they think is worth paying for. That's not to take anything away from ambitious attempts at alternative funding methods, but fighting against the fundamental market dynamics is not the way to do it, you have to come up with ideas and concepts that resonate with current trends and modes of thinking.