“If you’re not paying for it, you’re not the customer; you’re the product being sold.” – Someone on MetaFilter
This quote is awfully popular with the anti-advertising crowd. You know the type. They believe that the Internet was once successful as a non-commercial medium and it can be so again, if it weren’t for all these pesky advertising companies cluttering up the landscape. Many of them will download ad-blocking software, block cookies or wipe them regularly, and do pretty much whatever they can to avoid being digitally advertised to.
Those who go to such lengths are typically outliers – an extremely vocal minority – and comprise such a low percentage of a typical digital community’s user base that publishers have been able to effectively ignore them for years. But with controversies over third-party cookie blocking, the continued uptake of ad-stripping browser plugins and an increasing diversity of operating systems and browser types, a publisher or community owner might wonder whether the core of ad-accepting, engaged visitors will always continue to be there. But that is another column for another time.
What I’d like to delve into is the oft-repeated assertion that the Internet was just fine as a non-commercial medium and that we can somehow press forward without a viable ad model.
Folks, it’s easy to set up a blog, forum, mobile app or some other presence in some deep, dark corner of the Internet and ensure its continued existence with change from your couch cushions. However, as soon as that thing in that dark corner provides utility to a significant number of Internet users, there are costs that can quickly grow beyond what one can reasonably expect to find in the cushions.
Speaking from experience, traffic can grow to levels where a shared webhost can’t keep up with demand. Suddenly, your $9.95/month shared hosting plan is inadequate and you need to upgrade. Databases get too big and need to be upgraded, too. Maybe the forum software you’re using for your community of hobby enthusiasts needs to be relicensed or moved to another platform because the original authors of the software couldn’t protect it against hackers anymore. Or maybe you’re supporting more users of your mobile app than you ever thought possible, and you simply need to upgrade your systems.
If it scales, it costs money. Without an ad model to defray costs, you might find yourself trying to bridge a very wide gap. Without an ad model, what’s really open to someone who wants to scale a digital presence? You’ve got, essentially, two or three options:
1) Paid Access. There are various ways to implement a paywall, but the model has a tough time working for digital products that people don’t use on a near-constant basis. People are hesitant to pay for something unless it’s providing regular utility. If you happen to be moving from a free model to a paid one, it’s likely that only a small percentage of your most engaged community members will pay to use the community. And with the sheer number of people who will run in terror once a paywall goes up, a community can easily stagnate and die. You can allow tiered access, restricting the access of non-paying members, but even if you succeed you’ll hamper growth severely.
2) Extended Functionality for Paid Users. This is really just a fancy paywall, but the thinking is that you keep functionality and access the same for all your users, but offer some sort of enhanced functionality or permissions to people who will plunk down their credit card for the privilege. This can be a risky proposition, as it puts you in the position of having to predict whether or not existing users will pay for a higher level of service or not. If not, you may end up investing in development of Gold-level features and payment systems you might not be able to monetize.
3) Virtual Tip Jar. You can beg your users for contributions in order to cover costs, but there are problems associated with it. For one, it’s tough to project whether your users will donate at all, much less donate enough to offset your costs. How many publishers or community owners can we point to who have made this model work? I mean, other than Jimmy Wales?
If you’ve ever had a grassroots community or publishing organization, you know that not only does advertising provide the ability to avoid angering your user base by not providing a free access model, it also plays an important role in a digital entity’s life cycle – it’s the one thing on the paid publishing continuum that lies between the free model and directly appealing to users for revenue. In other words, it’s the training wheels many free communities and applications need in order to access the proving grounds for a paid access model.
You see those training wheels in action all over the web, from the community leader who serves ads to users until they see enough value to cough up a subscription fee, to the app developer who provides both a paid download and a free ad-supported version of the same app in order to provide utility to the widest audience possible.
Now, tell me with a straight face that digital media can survive without a viable ad model. Picture what might happen if, every time you searched on Google, the majority of the sites behind the search results had their hand out for an access fee. How many of those sites would continue paying for bandwidth and technology out of their own pockets, as a labor of love?
Tom Hespos is a contributor at The Makegood and Founder and Chief Media Officer at Underscore Marketing, a boutique firm that creates and manages digital marketing programs.