The End Game for Ad-Supported Content

I’ve never been a fan of ad-supported content. Not just because I find ads annoying (which I do), but because I see them as economically inefficient.

The Myth of “Free”

As consumers, we consistently prefer “free” ad-supported content models over models that expect us have to pay cash. But “free” isn’t really free. As the aphorism goes, time is money. We don’t watch ads to inform or entertain ourselves; rather, we spend time watching ads as a form of barter.

For example, a typical hour of television includes 15 minutes of ads. At the median American wage of $25/hour, it costs over $6 in bartered time. How many of us would pay half of that to rent the show (without ads) from iTunes or Amazon? We make irrational economic decisions, seduced by the promise of “free”.

And it gets worse. The billions that companies spend on ads have to come from somewhere. Naturally, they come from us as consumers, reflected in the prices of the goods and services we buy. We’re paying for the “free” content twice — first with our time and second through higher prices.

And even worse. Many consumers, myself included, dislike ads so much that we use ad-blocking technology to block them. We’ve had ad blockers for our browsers for about a decade, but they’ve gone mainstream — nearly 200 million people block ads today. We even have ad blockers for our iPhones. As a response, publishers are starting to pay for technology to detect and neutralize ad blockers, and some are even using it.

The End Game

Our insistence on “free” has led to an economically irrational exchange of time for money, and a wasteful technology arms race. This arms race is not sustainable, but what is the end game?

I see two possible paths: one utopian and one dystopian.

In the utopian path, the ad-supported model is no longer economically viable. No advertiser wants to spend money on ads that will be filtered out by client software. There will still be advertising in public spaces, but mostly we’ll find that the only way to obtain content is to pay money for it.

In the dystopian path, advertising burrows so deeply into content that it becomes impossible to filter out. Think product placement, but taken to its logical extreme. A world of advertorials and advertainment, where content is free precisely because it is advertising.

I hope we pursue the utopian path. But I fear that the dystopian one is at least as probable. As a society, we’ve continually demonstrated how much we love getting things for free, and I suspect that predilection will dictate the path ahead.

As for me, I’ll keep blocking ads and paying for content. Time is money, and I’m not giving mine up without a fight.