The Whole Web Pays for Google and Facebook to Be Free
bloomberg.com
bloomberg.com
Imagine I really like hamburgers. I might choose to $5 each week on a burger and be happy with the quality of a burger made by people who only make burgers.
The alternative is spending $4 a week so I could access a buffet with lower quality burgers (after all, it’s not their speciality) but also hot dogs, sandwiches, poke bowls and sushi.
Trying to convince me that the buffet is a better deal just because I have access to a wider range of foods when all I really want is a burger is not a winning argument for me.
Maybe I could save it by asking where am I likely to get a better quality burger: the place that charges me $5 a week just for burgers, or the one that charges me only $4 a week AND I get a whole lot of other stuff I don’t like but could still consume
In these conditions, quality and satisfaction of a niche is more important than quantity (though quantity has a quality of its own)
Source: I'm over the hill. now get off my lawn.
Wait, what? Is this the yearly figure? A subscription to the NYT cost >$500/year? Who the hell pays that much for a newspaper?
You'd think that's expensive, until you start to dig into the economics of running a modern newspaper. The operational side is massive and complex. There's the newsfloor (NYT employed 1.300 staff writers in 2016), digital infrastructure to maintain and evolve and logistics for actually printing and distributing of paper, and so on and so on.
Eh? That's less than $1.50 a day?
That's how much it used to cost to get it delivered to your door daily.
If you're into that niche, it's great value for money. But even with those prices, FT still runs ads on their pages.
Unfortunately in today's world, where people get their news "for free" from fb.com or twitter.com or news.google.com, it seems like a huge price to pay.
One favorite was a headline to the effect “Boat builders weather the storm.” I had come to expect multiple puns per article towards the back of the paper. Today I feel lucky if I pick up one or two per paper.
At the same time, because of the high quality free knowledge we have today, you can externalize knowledge and let people research it themself if they wanne know, and get away with lower quality of writing, meaning you can do it faster and need less people to pay. Meaning you can offer a lower price, because it's neccessary to compete in a world of massivly free information.
The whole "technology tree" for newspapers like the New York Times was actually really fascinating. Paper and Ink by the trainload and delivery trucks making their way across the nation in the wee hours of the night.
do papers even have print editions anymore?
I think the high fees on substack, like on patreon have another reason. It creates a weird parasocial relationship between the creator and the reader that gives the reader the feeling that they have contributed to a cause, or has some personal relationship with the author they support, and so on.
In that way it seems to me more similar to twitch streamers who often extract huge sums of money from their donors, when objectively the viewer gets more content out of a 10$ streaming subscription.
That being said, there is value depending on what topics you're interested in. The value of NYT for me is the Arts & culture section. But I'd happily pay for Matt Stoller's content,Taibbi, Siskin or Gwern if he had one.
There is risk that's been highlighted of creating bubbles but seeing how news media has reinvented itself over the last decade, I can't see how that can be avoided, except this bubble is self-curated and more specific, which one can argue is better.
[Edit: clarification on last line]
And a Substack for his newsletter: https://gwern.substack.com/ (AFAIK this is free though)
I'm a previous subscriber of NYT and Bloomberg online. I've kept my WSJ subscription partly because its easier to consume only the useful content.
I also subscribe to a couple of email lists where the author absolutely provides value in their niche over and above the larger newsrooms. They are usually great complements to each other and it tells you something that the journalists are also reading the newsletters.
When checking the New York Times, I prefer to look at the "Today's Paper" list of headlines, it's much easier to parse and less clickbaity: https://www.nytimes.com/section/todayspaper
Same for the Washington Post: https://www.washingtonpost.com/todays_paper/updates/
Nowhere on that streaming content is someone explaining the intricacies of speedrunning The Legend Of Zelda (as a simple example.) It turns out there may only be a couple thousand people in the world really that interested in that content, and only a few hundred willing to pay for it. The economy of scale thee changes the calculus of how much you are willing to pay.
> t turns out there may only be a couple thousand people in the world really that interested in that content,
As evidenced by the success of SummoningSalt's youtube channel
This is honestly a troubling trend in my opinion. These parasocial relationship are sort of emergent based on these new creator->fan direct channels that are popping up.
I'm concerned that now these platforms are going to lean into this even more, encouraging this sort of thing instead of it just happening organically.
These relationships are really not healthy for people. Not for the creator (even though they profit from it) and absolutely not for the fans who are likely missing out on forming real relationships with real people in favor of this parasocial thing that will ultimately not be fulfilling (and expensive) for them.
It's a different type of relationship if you're a 'personality' on Twitch or IG, and your audiovisual presence is what gets people to follow you. Books don't monetize nearly as well, and a lot of the people in this area don't really have anything to write about. So they pitch what they can: energy drinks, mattresses, Audible subscriptions.
It is annoying when a paid subscription doesn't eliminate ads.
From their perspective if you bought a physical edition you'd still get the ads so there's no difference. And I guess by showing a willingness to pay and the presence of a disposable income, you may be proving yourself to be of more value to the advertisers - paying makes you more of a target not less (however unfairly).
Online advertising is by itself a great thing. In the past, only the likes of Unilever could afford to run ads on TV and Newspaper. That was because in order to convert they needed not just ads and an online presence. They literally needed to be on the shelves of every major shop so that the customer could complete their advertising journey
I can see a competitor to Google materializing in the coming years due to Google's increasing difficulty to track user behavior. But I'm not so sure about Facebook. The only hope there is that platforms (Apple, Google and browsers) eventually force FB to become a paid service by completely disabling its tracking scripts.. which is unlikely
You do realize that Facebook and Google are separate companies that compete with each other, same as McDonald’s and Burger King?
They need more competition, that’s for sure. But they do compete with each other, same as McDonald’s and Burger King.
Google's and Facebook's customers are the advertisers, and they compete for those. But users are the product from which the burgers are made.
> What I truly miss is a competitor for both Google and
> Facebook. McDonald's has Burger King. Who do we go to
> when Google and Facebook overcharge us for advertising?
> The problem here is lack of competition
And no, I do not consent to Whatsapp's terms of service even if I could carry a second burner phone.
Yes, but there were plenty of other advertising opportunities for smaller businesses. Local papers. Specialist magazines. Local radio.
Sports is one area of media that will truly be disrupted as we’re already pushing the limit of what people will pay and advertising is no longer able to pay the difference.
In the specific case of Netlfix this probably isn't true as their business model is an online version of a business that already charged a subscription (cable TV).
However in businesses that traditionally relied on advertising e.g. the New York Times as mentioned in the article, the transition to the internet is leading to more upfront charging i.e. Paywalls because they aren't getting the ad revenue required to offer their services for free.
My personal take from the article isn't that all content use to be supported by ads (although I would suggest that a lot more of it was than most people realise). The issue is that the near duopoly Facebook and Google have on web advertising, mean those producing the content can no longer rely on advertising to fund themselves.
As a result we are seeing more and more paywalls being put up to fund these businesses. The potential end result of this is that finding content will continue to be free and probably even get easier. Finding content you can consume for free however, is likely to get a lot tougher.
There is only so much of a premium you can charge before no is willing to pay for your product.
No ads were involved in take-home videos, that I recall, other than late attempts at unskippable promos by the studios who released the movies themselves (that was after I gave up renting videos).
I don't see any causal relationship at all.
However when looking at the rise in the number of papers going behind a paywall like the NY times, there is an argument to be made that this is being driven by the fact it is no longer viable to run an ad supported business because Google and Facebook have control of too much of the market
But I took "media" to mean something more broad, including recordings, printed literature, and performances, which traditionally were mostly ad-free (excluding periodicals).
They conclude that "we should recognize the trade we’ve made from ad-subsidized media to ad-subsidized search and social networking", which I guess is a well-intended statement but somewhat obvious, right?
Hacker News threads are filled with users arguing that they gladly pay a lot just to avoid advertising.
Their last sentence
> Perhaps now we can forge a better understanding of the value of content. It costs money to produce, so it should also cost money to consume.
I think is important, but maybe not for their reasons. Current paid services are sometimes very overpriced, which is partly caused by the lack of easy and scalable micro-transactions and a missing understanding of what a specific service might be worth. On the other hand there are some great services that get underused because users don't think the up-front cost are justified.
The turn to subscriptions that we see in random tiny auxiliary applications is a great example of that. The developers of a small CBT-App I used for a bit thought they were worth 8 euro a month. They tried it a few months and then gave up, largely because they apparently failed to find a shared understanding of their value with their users.
The second one Scroll[2] is a centralised one. That has bigger names attached and removes ads from things like The Atlantic and Bloomberg. It shows you a breakdown of where your monthly fee is split.
I love not receiving ads, and I hope that this tech pans out, but I am only doing it as an experiment so far. Personally I would prefer Coil and its underlying protocol to succeed. But it is highly possible these all fail. At least I am avoiding ads, while still funding content. It shows promise.
- [1] https://coil.com/
- [2] https://scroll.com/
It is also filled with comments gist of which is “paywalled, didn’t read”.
I think both models have their strengths and ultimately are not meant for the same audiences. Which is also why mixing the two in the same product is tricky.
If there was a universal system where people could pay ~1$ in one click without having to fill in a form or provide any personal data (to reduce the risk of spam), I'm sure most people would happily pay.
On the other hand, for a single product that you use significantly (like a social network) it makes sense to pay a subscription as opposed to having your time, attention and privacy compromised by ads.
Cheap. Private. Low-friction. Pick two.
Pay one subscription, visit sites. If those sites have a specific meta tag, add-on detects it, providing you with access to paywalled articles. The longer the site keeps my attention, the more of my subscription they get. They don't have to know a single thing about me other than "I'm using this service and I have a running subscription". Service aggregates those micropayments from their subscribers within a time frame and avoids transferring small transactions and fees associated to the website.
Yes, Brave has a mixed model for funding. If you don't opt in into Brave Rewards, you can still fund sites using your own money.
I don't mind someone having my details, I just don't want that someone to be a party incentivized to spam me.
At the core of both of them is an economic transaction (direct dollars vs. ad impression), both of which use personal data like web history (to know which article has been "bought").
The big difference is the ad supported model is not linked to your bank account, and has some pseudonymous properties, but there is still the classic three-party structure of reader, publisher and platform, and still the huge pressure to be profitable.
1) So you're still having your personal web history tracked by a technology company, possibly even worse because it's linked to your bank
2) Economic pressures and incentives are roughly the same
3) End result is your data will eventually get sold anyway, much the same way that cable companies always introduced ads
I also have a belief but no hard data that advertisers pay more per impression than consumers ever will, which leads to this cycle happening in the first place. People seem to forget that the internet wasn't really profitable until targeted advertising, cutting that would mean the end of most web technology companies.
I'd never want to start/stop a subscription for a single article I randomly come across, and I have never stumbled upon a link that allows me to pay a buck or two to access this specific article I clicked on without starting a long term commitment with a site I've never heard of before.
I object mostly due to "free for me(FAANGS) but not for thee.
Said article is available to the Googlebot or to Facebook but not normal mortals.
If you want to be behind a wall, fine, be behind the wall--that is your prerogative. But the problem is that these articles clutter up my search results and I can't remove them.
edit: maybe this is what Apple News is? I can read lots of articles but have to go in through that portal, I can't click links on Reddit. Sometimes I do go into Apple News and find the same article but that is time consuming and inconvenient and often it isn't there.
In my experience, quite a few people say such things elsewhere as well, but if you actually give them the opportunity to do so (even if it's not "a lot", but actually a pretty small fee), such offers tend to perform badly, even among the people who initially requested such a tier, unless ads are very, very intrusive (Youtube of late might be such a case) or it's bundled with other, actually useful functionality, more content etc., or rolled out as an increase of existing pricing instead of a separate offer people have to actively pick (risky in itself).
People in general appear to be much more price-conscious when it comes to such things than they themselves seem to realize.
Side note, Youtube Premium includes music that I wouldn't have used, so maybe the cost of the service makes sense for people who use that.
The average YouTube user (>18yo) spends 41 minutes per day on YouTube. Let's guess that an average view duration is 10 minutes (~80% of an average video of 11.7 minutes). That gives us 4 video views per day.
The average per view is $0.18, so $0.72 per day. Multiply by 30 to get a month, and you end up with $21.60.
YouTube Premium is $11.99/month. So yes, there's a huge prize difference - the advertising revenue would be ~$10 more than the YouTube Premium price.
https://blog.hootsuite.com/youtube-stats-marketers/
https://www.statista.com/statistics/1026923/youtube-video-ca...
https://influencermarketinghub.com/how-much-do-youtubers-mak...
Newest public data I can find says there are 20 million YouTube Premium subscribers. There's 2 billion monthly actives on YouTube - ie, 99% are not YouTube Premium subscribers.
https://variety.com/2020/digital/news/youtube-tops-20-millio...
"On Average the YouTube channel can receive $18 per 1,000 ad views. This equates to $3 - $5 per 1000 video views."
I.e. 0.3 to 0.5 cent per video of which Google pockets 68%:32% which gives about 0.2 cent per video for Google per video view.
The first stats site says about 9 views per visit and day, so 9 videos a day is about 1.8 cent, times 30 days is 54 cents.
A year would be 6.5USD for the average user - about half a month of Premium.
However, as far as I understand, Google pays out the ads for premium customers, so you shouldn't count just the "to Google" portion. That's off in your calculation, to a factor of about 3. Using $4 (the average in $3 to $5) and 9 videos per day, we get 0.4cents * 9 * 365 = $13.14/year - a bit over a month of premium. Still devastating to my argument, of course.
I used Blende and was ready to spend quite a bit more on it, but they changed their rules and also had do little relevant content that at some point I gave up.
Recently found out one of the linux magazines sell digital articles as well as full digital so I will be probably be spending some money there, both for usefulness, entertainment (yep) and to support a good cause.
It's all about putting the price in context.
I also observe that I do get some free newsletters and my usual pattern is I read them regularly for a bit and then they go into being read less and less frequently. (Which was admittedly often my pattern with magazines as well.)
True, and I did before. I had a subscription to Ars Technica and a few other sites like Tweakers in the Netherlands (a big local tech site).
But, what I found lately was that these tech platforms were alienating me. They're trying to reach a wider audience and as such are delivering much less of interest to me. Much less 'deep dives' than before and more 'phoned in' articles and press release copy/pastes. And in the case of Tweakers are still delivering trackers like Google Analytics and Scorecard Research even to paid subscribers. Both sites also changing their design to be more visual and thus reducing content on the screen, which forces even more scrolling to see everything.
So I actually dropped my subscriptions. I still have the lowest tier with Tweakers but they're dropping that soon so I won't renew. I still adblock anyway because I don't want to be tracked (and yes I know it's not fully effective).
It just feels like every site wants to grow too big and widen their audience. They're no longer happy with being a small niche outfit, which waters down their value to me.
I notice this especially because of Hacker News. Because it's still a niche site. Every day I find a few 'pearls' here that I don't see anywhere else. Whereas the other sites are forcing me to dredge through crap I'm not interested in with less and less interesting pieces in between.
An awfully strange perspective from a business-oriented news organization.
Which part of this is misguided? That is exactly how it works. The more ads they can show, the more they are paid.
It used to be the case that much of (for example) the New York Times' advertising value came not just from the number of eyeballs, but from the specific nature of those eyeballs. Being able to target a specific category of people who read the NYT (they can afford the paper, they are likely to live in New York, they know long words, they have a specific worldview, etc) is incredibly valuable to advertisers. Market segmentation by publication is very powerful - even knowing that a viewer doesn't have much money, or hates buying things, or is cynical about advertising is more valuable than not knowing anything. It's the reason that so many niche magazines exist. Advertising to someone who cares about a very specific hobby is worth a lot. It's also the reason that most printed publications aren't free. Many could be if you take a simplistic view of the economics. However they would dilute their audience to the point where it would become less valuable to advertisers. Vogue advertises to people who want to look at fashion photos enough to pay $9 or whatever to do so.
With the internet, two things changed. Firstly the fact that anyone in the world could read a given article for free, meant that the average eyeball on a NYT article was much less 'NYT-reader-ish' than an eyeball on a printed page of the paper. Secondly, tracking and analytics meant that there was much more valuable and monetizable information about that reader than the fact that they are a NYT reader. Information like all the other things they have looked at, what they've recently bought, what apps they have installed, the content of their emails. Only the big tech companies and data brokers have this info. The data that the NYT has on you is trivial in comparison.
It didn't have to be this way. Newspapers could have ringfenced their own data and sold ads in a way which kept them in control. As a side effect it would have been better for their readers' privacy. They failed to understand their own business as well as Google did.
Now consumers are being blamed for this, for 'making the wrong choices'. I resent this for several reasons. Firstly it is an argument which denies the nature of reality. It is analogous with telling people they shouldn't shop at Wal-Mart, because local businesses will close. The solution is to change the rules to optimize for the things that we care about. Not to rely on the unlikely event that lots of people with limited resources will all make altruistic decisions to protect the nebulous thing that you care about. Secondly these newspapers set themselves up as society's only defenders of liberty and truth against the forces of darkness. In fact, a lot of them are full of propaganda, gossip and clickbait. Some of the $5 newsletters are in a class above almost everything in these newspapers. The people writing them are (typically) experts on one topic, they love that topic passionately, they have no particular axe to grind and they have much incentives to make something high quality.
I totally agree with everything you've said here, but I always get stuck on this part. What rules should we even change, and how should we change them?
Generally, I prefer to act for the things we care about than changing the rules to optimize for... However, this is a huge topic in itself that can not be dealt within a few sentences.
Employee conditions, monopolistic practices to squeeze suppliers and city layouts and zoning are all already regulated in principle. But what if it's something much more nebulous? Attempts to intervene for 'atmosphere', 'niceness', 'tradition' and so on seem doomed to be either useless or lead to unintended consequences.
But just trying to understand and be honest about what it is we want can be a huge step forward!
Including Substack in the fight, on the other hand, is pathetic. One would expect journalists to support each other and Substack is a tool _tailored for them_.
This isn't how markets work. It costs money to consume because people aren't able to find a free substitute and the place some value in it. The cost of production is irrelevant.
First, one of the arguments being made here is that previous ad revenue subsidised content, but now it subsidises social media, so content must cover its costs directly.
One of the implications of that is that in the "old" system you might get a bundle of content, some of which you liked and some of which you didn't, but the whole thing was subsidised so you didn't mind this, because you weren't really paying for the bits you didn't like or didn't consume. And now in the "new" system you have to pay full freight, so you're reluctant to pay for things you don't even want.
In short, it's about people saying "I don't want to pay for an entire cable package (or NYT subscription), I'd rather pay for the exact content I want because it's cheaper overall, even if it's more expensive per item".
But the example given is this:
> Yes, you get better, more convenient and largely ad-free viewing — but there’s a good chance you’re paying more for it. The same applies to Twitter and Substack, where signing up to just four writers’ output at $5 a month each is already more than the cost of a $17 New York Times subscription, which gives you a greater breadth of coverage.
And that sounds like something quite different. If people are paying $20/month in Substack subscriptions instead of $17/month for a NYT subscription, they're not doing it to save money, but because they think they can get better content that way.
In fact, at the moment I am spending $20/month across Substack and Patreon for writing I care about, while the NYT is running a promotion for an online subscription for $3/month for the first year, then $8/month thereafter, but I'm happy with the value I'm getting from Substack, and I wouldn't dream of paying for the NYT, because in my view it's not even worth $3/month.
This isn't a money story, this is a quality story. And I don't think it has much to do with ad revenue either.
Second:
> Perhaps now we can forge a better understanding of the value of content. It costs money to produce, so it should also cost money to consume.
Again, I'm paying $20/month or so to Substack (mostly) and Patreon, so clearly I agree that paying money for content is (at least sometimes) a good idea. However, I think this is just a ridiculous, meaningless platitude.
Education and health care cost money to product; in most countries at least some of both are provider at no direct cost to consumers. Scarce natural resources (or broadcast spectrum) costs little or nothing to produce, but should certainly cost money to consume. And just because it cost you money to produce doesn't mean anyone will (or should) choose to pay money to consume it.
I once came close to subscribing to Bloomberg, but eventually decided against it, partly because it's pricy ($35/month!), but also in large part because so much of their content is just so poorly written and poorly researched. (Matt Levine is, always, excellent, but he's very much the exception. And, of course, his content is available for free, outside the Bloomberg paywall.)
Same thing as the the obsolete horse and buggy industry complaining about the automobiles taking up all the street space and causing traffic.
The establishment media got big, fat and lazy with their monopoly and selling limited ad space.
When the ads space became infinite in the web, they didn’t innovate and pivot to web technologies.
Google and Facebook innovated web technologies and leveraged their tools to filter and target valuable audience attention space.
The establishment media is obsolete and no amount of complaining is going to change the dynamic of the web. All they can do is talk about their high school glory days of scoring 5 touchdowns in high school championship game.