But newspapers, TV and Youtube would die out.
This is something that I still struggle to wrap my head around: if a company is paying X$ for advertisement, it means that people subjected to this advertisement will give Y$ to this company that they would not have paid otherwise, Y higher than X, otherwise there is no reason for this company to pay for advertisement. Yet everyone is saying "yeah, advertisement, I don't care, I just ignore it". Surely it cannot be true.
Conversion (getting someone to purchase) at scale with ads is not so simple as person sees ad, clicks, and buys. There are many steps along the funnel and sometimes ads can be used in concert with other channels (influencer content, sponsored news articles, etc). Within direct ads you typically have multiple steps depending on how cold or warm (e.g. have they seen or interacted with your content previously) the lead is when viewing the ad and you tailor the ad content accordingly to try to keep pushing the person down the funnel.
Generally if you know your customer persona well and have good so-called product-market-fit, then (1) you will be able to build a funnel that works at scale. So then (2) the question is does the cost to convert a customer / CAC fit within the profit margin, which is much more difficult to unpack.
However, it's worth keeping in mind that digital ad costs are essentially invented by the ad platform. There is a market-type of force. If digital ads become less effective and the CAC goes too high across an industry/sector, the platform may be forced to reduce the cost to deliver ads if the channel just doesn't make enough financial sense for enough businesses.
All this is to say, the system does/can work. Tends to work better for large established companies or startups with lots of funding. In general, not a suggested approach as a first channel for a small startup/small business. Building up effective funnels is incredibly expensive and takes a lot of time in my depressing personal experience.
Would you say that it indeed means that if ads are banned, the money to support news, tv, youtube, ... will still be there? I would think that in fact, there would be even more money for news, tv, youtube, ... as the ad company will not take their cut of the money.
Edit: Now that I'm thinking about it, ad may also work in directing expenses that would have been done anyway. For example, if I have 10 companies A, B, C, D, ... all selling the same kind of product, then it is possible that 1000 persons that want that kind of product will all spend 100£, shared between the 10 companies. So, company A will receive 10000£. But if company A does some advertisement for a cost of 5000£, maybe people will still spend the same amount, but for their brand in majority, so the 1000 persons will still spend the same 100£, but company A will receive 20000£ because some people will buy A instead of B, C, D, ...
I'd say advertising is in good portion what creates the "want" instead of a "need". If we were to rebalance the amount of purchases driven by needs instead of wants, we'd overall reduce the total amount of purchases. Each of them would also not have the extra cost of advertising included in their price.
You seem to be assuming that, in the absence of advertising, the company will sell as much as it did before -- just with lower overhead costs -- rather than advertising driving more sales and possibly lowering costs because the company has more customers. For some items / things this may be true-ish. I'm going to buy paper towels because I need paper towels, and advertising has little influence on that -- except, maybe, which brand I buy. But I'm going to spill things, and my cats are going to keep barfing on the floor from time to time, so I'm going to need paper towels regardless. And I'm not going to buy a bunch of extra ones just because the ads are so good.
Don't get me started on soda advertising and such because the amount of money those companies spend on ads is mind-boggling and I don't think it moves the needle very much when it comes to Coke vs. Pepsi...
But, would I go see a movie without ads to promote it? Would I buy that t-shirt with a funny design if I didn't see it on a web site? Sign up for a SaaS offering if I don't see an ad for it somewhere?
If a SaaS lands 20% more customers because ads (and other forms of marketing) that's not necessarily going to mean I pay more for the SaaS because ads. It may very well mean that the prices stay lower because many of their costs are fixed and if they have 20% more paying customers, they can charge less to be competitive. If a publication has more subscribers because it advertises, it may not have to raise rates to stay / be profitable.
In some cases you may be correct -- landing customers via ads equals X% of my costs, so my prices reflect that. But it's not necessarily true.
For newspapers for instance, Exxon or Shell could be paying a lot more to have their brand painted in favorable light than the amount the newspaper readership could afford to pay in aggregate.
The same way Coca Cola's budget for advertising greenness is not matched by how many more sales they're expecting to make from these ads in any specific medium, but how much the company's bottling policy has to lose if public opinion changed too much. That's basically lobbying money.
TV would absolutely still exist, given that people pay for it and there is a big industry around ad-free streaming services already.
Non public broadcasters are rarely if ever and free. Meaning that their business model requires this as revenue to survive.
Right now we've already having oligarchs owning news groups and very few independent publications. But getting rid of other revenue sources won't help that situation, we'd get more Washington Post or New York Times than Buffalo's Fire.
It's a lot easier IMHO to have an independent newsroom if the business side can advertise for toilet paper and dating sites than if it needs to convince Jeff Bezos of its value to him.
And investigation journalism costs a lot while not getting valued by many, there's no way we get a set of paid-only-by-viewers papers from all relevant spectrums covering most of the news happening every day.
The missing part of this sentence is "as they exist now". There are other models that exist that could support broadcast and publications. There are other models yet to be explored or that have floundered because they've been snuffed out or avoided because the easiest (for certain values of "easy") path to dollars, right now, is advertising.
It is a pipe dream, of course -- and the author of the piece doesn't really do the hard work of following through on not just how difficult it would be to make advertising illegal, but the ramificaitons. While an ad-free world would be wonderful, that's a lot of people out of a job real quick-like. Deciding what constitutes an "ad" versus content marketing or just "hey, this thing exists" would be harder than it might seem at first thought.
And long-tail ones are the best. There are some great videos on youtube which are 10+ years old and do not have millions of views. I am sure many of their uploaders already forgot about them. I cannot see them existing without being supported by "something", and if that's not advertisement, than what?
YouTube already has subscriptions. An ad-free YouTube could extend that and maybe add lower tiers of subscriptions for X hours per month viewing. This would be a double-win, if YouTube's were centered around catering to users and not maximizing time on site with The Algorithm(TM) to ensure people see more ads -- which also encourages some of the worst content on YT.
But a big shift like ridding the world of advertising would, of course, have tradeoffs. Maybe that would be "long tail" videos on YouTube. If you can get rid of ads and have to lose those, is it worth it? Conversely, what has advertising killed off that we might be able to have again if it was gone?
Instead they want to price-gouge me for 5x that so... no thanks. I'll just use my ad blocker.
The model I understand you're suggesting is individual pricing based on usage and value as an ad target. A lot more complex and opaque than a straightforward fixed fee for all users.
Also, it's worth noting that YouTube Premium includes YouTube Music, which serves as your Spotify replacement. You might not need this, but the subscription fee covers more than just the lost ad revenue on YouTube.
I don't really recall the details of that calculation unfortunately. But it would have been based on cost per ad view (no clicks) times the number I expect to be shown in a month.
The model I'm suggesting would be more like I load YouTube up with $10 and slowly burn through it as I view videos instead of being shown ads. The cost per view could actually be just as or even more transparent. Perhaps videos are tagged with the cost to view, which could open up a whole new world of economy among creators to gatekeep with higher fees themselves if they want to value their videos at more than the default. Being transparent on pricing this way is literally using the exact same infrastructure they already use to price ads, just letting me pay the cost instead of the advertisers.
Yes.
We would lose one of the most useful tools introduced to mankind in the last 3 decades.
Good. They're but shells of themselves, eaten through and bloated up by cancer of advertising. Even if they were to die out, the demand for the value they used to provide will remain strong, so these services would reappear in a better form.
I thought people in tech/enterpreneurship circles were generally fans of "creative disruption"? Well, there's nothing more creatively disruptive than rebuilding the digital markets around scummy business models.
(Think of all business models - many of them more honest - that are suppressed by advertising, because they can't compete with "free + ads". Want business innovation? Ban "free + ads" and see it happen.)
Most people never even thought about ads that way.
For my own little part - firefox and ublock origin since it exists, on phone too. To the point of almost physically allergic to ads, aby ads, they cause a lasting disgust with given brand. I detest being manipulated, and this is not even hidden, a very crude and primitive way.
It's even worse when you can't even be detested because you don't realize it is happening.
The remaining YouTube channels would be concentrated around the ones that are of higher quality, rather than easy slop produced to push ads. Nobody would try to clone someone else's channel for money. They would only be produced by people who were passionate about that topic. There would be fewer channels by passionate people, but the percentage would be much higher, so it's not necessarily a worse situation overall.
TV has always cost money - you pay for satellite or cable, and the free-to-air programming available to you is overtly subsidized by your government - they shouldn't need to double-dip by showing ads.
We used to pay for newspaper subscriptions too. A lot of newspapers are trying to go back to that, but it's a market for lemons. Maybe if advertising was banned, we'd each subscribe to one or two online newspapers and discover which ones are decent and which ones are crap. Remember, it's harder to make someone who was paying $0.00 pay $0.01, than to make someone who was paying $10 pay $20. Would the market be more efficient at price discovery if there was no $0.00 at all?
I keep hoping that decent aggregators will emerge - or I will find the ones that exist.
I am happy to pay for news, but I cannot afford to pay for all the ones I want, and I cannot afford the time to read all I want. I would like to pay good aggregators....
I have some questions about your vision.
- How many content creators would no longer be able to make passion videos as their full-time job because they're no longer getting revenue-sharing from YouTube?
- Okay, some content creators also have Patreon etc. What's the incentive to post these videos publicly for free, as opposed to hoarding them behind their Patreon paywall?
- What's the incentive for YouTube to continue existing as a free-to-watch service? Or even at all? Take away the ad money, and I can't imagine that the remaining subscription revenue comes anywhere close to paying for the infrastructure.
Or at the very least regulate it as a utility and allow users the ability to bring in their own advertising.
I don't think that nationalizing such a service makes much sense either. What motivation does a government have to operate a service for global benefit (as opposed to just its citizens)? Surely we shouldn't want a US YouTube, a French YouTube, a Japanese YouTube, etc.
> Or at the very least regulate it as a utility and allow users the ability to bring in their own advertising.
Doesn't that run counter to the premise of banning advertising in the first place?
