Ars Technica has a post up in which they argue that ad blocking software seriously hurts their main revenue stream (advertisement). A quote from that post:
My argument is simple: blocking ads can be devastating to the sites you love. I am not making an argument that blocking ads is a form of stealing, or is immoral, or unethical, or makes someone the son of the devil. It can result in people losing their jobs, it can result in less content on any given site, and it definitely can affect the quality of content. It can also put sites into a real advertising death spin. As ad revenues go down, many sites are lured into running advertising of a truly questionable nature. We’ve all seen it happen. I am very proud of the fact that we routinely talk to you guys in our feedback forum about the quality of our ads. I have proven over 12 years that we will fight on the behalf of readers whenever we can. Does that mean that there are the occasional intrusive ads, expanding this way and that? Yes, sometimes we have to accept those ads. But any of you reading this site for any significant period of time know that these are few and far between. We turn down offers every month for advertising like that out of respect for you guys. We simply ask that you return the favor and not block ads.
Basically, what they are saying is, “in order to receive value from Ars Technica, a customer needs to accept some abuse in the form of advertisement”. How’s that for a business model. I can understand and appreciate that a site like Ars Technica makes considerable costs (employees, bandwidth) allowing them to create and distribute solid technological content. I can also appreciate that in order to survive or even create a profitable business Ars Technica needs a revenue model.
But the problem I have with this quote is that they are clearly walking away from a responsibility that belongs to them, not to the end-user. They are addressing the wrong issue. The issue isn’t users blocking advertisement. The issue is that Ars Technica has chosen a revenue model that provides little value to its users. Those user that block advertisement clearly do not care about them. Another quote:
Imagine running a restaurant where 40% of the people who came and ate didn’t pay. In a way, that’s what ad blocking is doing to us. Just like a restaurant, we have to pay to staff, we have to pay for resources, and we have to pay when people consume those resources.
This analogy is wrong of course. The correct analogy would be “Imagine a restaurant where people who come in to eat have to see large billboards a t their table in order to consume food.” The end result would be that more than 40% will likely never visit that restaurant again, no matter how great the food is.
Generating revenue online is not easy. Generating revenue online with great content is not easy either. Advertisement, and the advertisement based business models are the easy way out. Instead of making tough decisions, think creatively about how your users WOULD pay for the service you offer, you choose advertisement, and then complain that no one cares about it.
It’s time we accept that the advertisement based business model simply will not do. Advertisement only works as a business model if the advertisement itself provides the user with direct value. In all other cases it is just a simple form of customer abuse. The sooner we accept this, the sooner we can start dealing with it. Each and every quality site will cease to exist, simply because their underlying advertisement based business model is faulty. I realize that users are not (easily) willing to pay for a great service. But that still doesn’t provide justification for a business model that is doomed to fail.
There are tons of other ways that publishers could attract revenues. The best business models leverage user value. Maybe that is the real issue that needs to be addressed by Ars Technica.
@vanelsas 
Hi Alexander.
Respectfully, I think you completely misread the post. If anything, Ken’s only argument is that if you love a site, don’t block their ads. We didn’t say it was immoral, evil, wrong, criminal, or bad. If you love the site so much, find a way to compensate them because its costing them money to produce that value.
Alternatively, support their non-ad options like our Ars Premier Subscriptions[1] which allow people to bypass the advertising industry completely and compensate us directly.
The response to our article was amazing, hundreds, if not thousands of people decided whitelisting was the right thing to do, we got our message out all over the web, and perhaps importantly, we signed up over 150 new subscriptiors over the weekend. These people are a part of groupe who are forging a future of directly funded journalism where advertisers don’t come into play.
1: http://arstechnica.com/subscriptions/
@Clint, I didn’t misread it, I disagree to it.
“If you love a site, don’t block their ads” is precisely why I think Ars Technica is addressing the wrong issue.
The issue is that advertisement provides the user with no value. You should investigate alternative business models.
“Supporting their non-ad options” is already a huge improvement, although I fully realize not all users will pay for a subscription.
I think what’s also not stated is that many advertisements from site to site are highly annoying (even deceptive) slide over, slide under, slide around.
Blocking them is the best solution – and one that I’ll continue to do.
In my opinion sites brought this upon themselves by allowing all manner of creepy advertisement into their online inventory.
Are you shure, you’re dutch? Will people eat in a restaurant where they have to look at bill boards? Sure, if the food is free they will.
I run a small technical blog, that I would love to make some money off, but I don’t think anyone is willing to pay me for the content on it. That doesn’t mean it’s bad content or that it doesn’t add value for the user. Feedback shows that people do get value from my blog. However there is vast competition who are providing about the same value for free.
If you can come up with a plan to put my blog into a different business model and you can come up with a decent eplanation of why that business model will work, then I’m happy to try it out on my blog.
Greets,
Jonathan
Yeah, I’m Dutch 😉
I’m sure there will be a crowd for free food and ads, but on the web that model is a farce. No one gets value from it (although it does provide revenue). The user ignores or blocks the ads, the advertiser pays but doesn’t really reach anyone, and the publisher gains some revenue at the cost of annoying his users.
That sure doesn’t sound like the best business model out there.
I guess one way of framing this into a larger, more fundamental question is this: Then what *is* the right business model when you are in the web content business? You can’t put your content behind paywall, that’s not option. It used to be that content was free, and service providers were charging on their containers (newspapers, books, plastic CDs, DVDs etc etc) but on the web there’s no container and you can’t charge on the container. If you are iTunes or Hulu, you are indeed charging on the content itself. But no one will pay any text-based content anymore. What’s your thoughts on this? i.e. How can bloggers or publishers make money other than ads? (By the way, ads itself isn’t sufficient source of income for most bloggers anyway)…
That is exactly the question that need answering Chang. I have ideas, but it isn’t a core thing for me (I don’t make money off my blog, it’s for fun) 😉
Dear Alexander,
I usually agree with your statements and really like your non-mainstream attitude. But I think you missed the aspect that advertisement has been an important source of revenue for the print industry for a long time as well. So in general it is not a question of content that is connected to advertisement. So why should it be with web content?
And how should it be possible to create a payment system that can be applied to that myriad of different sites that are most diversified. Even if you have professionally created content, for most people it doesn’t make a huge difference to go to the next site where it’s free.
How can you as a professional journalist compete with zero cost (driven only by passion) bloggers like yourself? The general situation I think makes it almost impossible to monetize content if not by advertising. It’s quite unlikely that there ever will be enough people to pay for the last member of the whole industry. It’s just too many authors who create professional content for free and out of passion that you can’t really tell them apart from people who are trying to make a living off of it.
Also, how do you differentiate your content in a ecosystem where a link, copy, feed or another source tells you an almost similar story ? Not that I myself do really appreciate great content and get the value out of it, but paying for all these sources will make me a poor man in no time.
But I agree that I can’t really bear the omnipresent advertisement industry, it makes the whole web so utterly gross.
Best for the future.
Joerg
Joerg,
I fully understand the issue. It is really complicated. If you are a professional writer, it’s nearly impossible these days to earn a decent living (even advertisement based). But the fact remains, the ads are useless for everyone.
Think about it from the advertiser perspective. Itsa big scam if a site like Ars Technica calls its users to stop blocking ads for the sake of revenue. What will happen to those ads that get viewed then? They won’t really be viewed, just gracefully ignored.
Fact remains that no business can exist without a solid business model. And advertisement in this case is just not good enough. A site like Ars Technica will need to do much better than that.
I’m not trying to make anyone poor, I’m observing that the model is just not good enough.
Thanks for your thoughts on this issue Alexander, I always enjoy your posts on the issue of business models. I posted on this issue after reading posts all over the web sparked from the Ars Technica post. Their attitude reminded me of the Irish govt ‘after the crash in November 2008 when the Irish government decided to continue with their plan of increasing VAT on goods & services that were already some of the highest priced in Europe. Across the border in Northern Ireland, the UK government dropped VAT on goods & services that were already much lower priced than in the Republic. Droves of people were crossing the border, a couple of hours drive, every day to purchase their groceries & Xmas goods in Northern Ireland. Never ones to arise early except for financial reasons, they were queueing for hours before shops opened across the border. The Irish government pleaded saying that they should be loyal to Ireland & buy in the country, but provided no incentives for that to happen. Of course no-one listened & they continued taking the trip across the border even to this day TO SAVE MONEY! Many businesses have gone to the wall & the Irish Republic was talking about going to the IMF at the end of last year so their pleas to the public was having a real affect in the economy. But to this day they still have not implemented a plan to ensure that their own people would shop in their own country? Go figure?’ Read more http://www.ezebis.com/2010/03/venture/online-revenue-business-models
That sounds pretty dumb 😉
It feels like the gov’t, or Ars Technica, is victimized doesn’t it. Doesn’t suit them well.
Hi Alexander,
There is one particular point in this post I have a hard time understanding. You say users derive no value from ads, but ads are not what users are visiting the site for – the content is. It is precisely because ads themselves do not really have a value of their own that this particular business model was born.
While I agree that Ars Technica’s plea won’t solve their problem on the long term, sometimes, there is no magic solution. Users will have to pay somewhere, or serious news sites will eventually go the way of the newspapers. Sure, the marginal cost of delivering this piece of news to an extra viewer is near zero, but this logic can only go so far.
People talk about sustainable consumerism more and more every day. Quality journalism isn’t free, and when a full generation of kids has seen the limited prospects of this career path, we’ll be stuck with Twitter as our main source of information on what’s happening in the world.
It is simply a flawed model. Ars Technica may display ads, but they can expect that 80% gets blocked and the other 20% gets likely ignored.
Fighting for advertisement takes away energy from figuring out business models where everyone wins.
hi:)
I think the market will decide. Some of us do’t mind adds, others do. So,the q is not about the business model, it’s about a proper understanding of the various kinds of users and their needs. Dont’overestimate the value of adds. If your link pops-up, than usually also your competitors link.
@fvdr
Hi Frans,
long time ago 🙂
The market has dictated advertisement for a long time now. I believe it will gradually be replaced by something that actually works for publishers and users. This general ‘one size fits all’ model simply has too many flaws.
blocking ads does not make any1 feel guilty, website have no right to bombard users with intrusive ads, flash and huge pops ups that extend a webpage, its nothing more than desperation and every ad i come across from any website i block. i dont feel guilty 1 lil bit if anything i love blocking their ads and i couldnt care less if a website has to close down , bad luck. as long as i can surf the net ad free, thats all i care about, and thats excatly what im doing, so stuff advertising ill keep blocking everything:)