Why I changed my mind about advertising
I used to be very anti-advertising. I believed that in addition to being annoying, it was unnecessary—that if for some reason advertising became infeasible, sure, some companies would go out of business, but they'd be replaced by better companies with other business models, and the rest of us would be better off for it.
I even made this prediction in a Hacker News discussion:
I'm working on an early-stage startup right now, and I'm certainly not going to use ads as part of my revenue model.
Fast forward two years and several pivots, and my slightly-less-early-stage business is doing $900 per month in revenue... from ads. Along the way I've also adopted a new mental model for advertising. Basically I think of attention as a currency and advertising as a foreign exchange. When you use an ad-supported service, you're not "the product," you are the customer. You pay with attention, and the service trades some of that attention to an advertiser in exchange for regular currency. The great thing about attention-as-a-currency is that it has certain properties that make it a viable way to charge for some services where regular currency isn't.
In particular, attention is a form of micropayment with low friction.When you create a product that provides a little value to a lot of people (vs. a lot of value to a few people), any friction or transaction costs can easily dominate the amount you charge and make the product unviable. The Sample (my business) makes almost 1 penny per user per day thanks to paid forwards (enough to cover the cost of sending email with plenty of margin left over, fortunately). Theoretically, that's equivalent to charging everyone a subscription of $3.65/year, not including Stripe fees—except that charging attention instead means no one has to put in a credit card, and they don't even have to decide up front if the cost is worth it since it's pay-as-you-go. If it's not worth it, people try it for a bit and then unsubscribe.
This doesn't address more salient concerns with advertising, like sharing data with 3rd parties or the question of if it pushes companies to maximize for engagement more than they otherwise would. (There's also the fact that some ads are just plain annoying, but that's no different from a product that's too expensive.) However, this small mental shift is what made me think we should try to work out solutions for those problems that don't involve simply abandoning ads altogether.
Published 4 Oct 2021