@bexelbie @neil
When I was a student, I played an online game called Urban Dead. One thing struck me while playing: the game was ad supported, but most of the ads were for other online games that were also ad supported. So where did the money come from? Game A shows an ad, gets some money, uses it to show an ad on game B. The small number of ads for things that were not themselves ad supported were the only way money was actually entering the system. And, because each game’s revenue was based on the number of ads it could show, there was a strong incentive to advertise more to bring in more players.
This spiral worried me. When you enter a market with a ‘free’ ad-supported offering, it’s hard for other players to compete. They have to convince users that their product is worth more than the ‘free’ one. Paid offerings will be squeezed out by free ones. But, when an industry shifts from being mostly paid to being mostly ad-supported, the money entering the ad ecosystem decreases. Over time, the number of companies able to pay for advertising with money that didn’t come from showing ads decreases. Worse, it concentrates in either exploitative or luxury markets, which are less able to be replaced by ads. This places a lot of control in the hands of a small group.
Quite aside from the social impacts, I remain convinced that ad-supported industries are an economic disaster.