In a recent article on Medium called The End of the Ad-Supported Web, Julien Genestoux puts the finger on many things I was obsessing with these last few months about ad monetization.
You may want to read the article first; my additional comments are below.
The main gripe with ad monetization is that companies relying on it willingly disconnect their added value from what they invoice. Thinking that the user is the product is not only wrong, it dismisses that said user is the first business driver. Not only is the user not the product, but he's a non-paying customer.
This lateral move seems minor, but it is pretty critical. When Zuckerberg meekly declares that ads are the way to allow everyone on the platform, he already has excluded the possibility of having tiers where some will pay and others not.
Why? Because he wouldn’t make nearly as much money. But the few degrees of difference in the initial trajectory have been compounded over 14 years in the culture, the strategy, and essentially, what Facebook is as a product, which means that it is an ad machine and nothing else anymore.
The risk for any new entrants (not only in social media) that find it wise to monetize ads is that they will be running into the same trap if they ever are successful. At the same time, the irony of glorious incumbents such as the New York Times that were monetizing through both ads and subscriptions is that they feel more and more the monetary pull to become also ad machines. But you also see this struggle with ‘famous’ YouTubers: is your content value how much Youtube pays you, or how much Patreon pays you? Because they are not aligned.
As people working on innovation strategy, the core assumption we always constantly is that you monetize your added value and then decide on the shape, color, and odor of your product. (A not-so-subtle way to prevent would-be innovators from spending months coding or working on the product without taking care of what their market is.) This always permanently ad from the table as a monetization scheme.
The ontological perversion we’ve been living with is that Google (one of the most successful companies of the «news economy") is that any transaction based on content, information, news, or data should be monetized through ads.
This is an original sin that still weighs on the global economy.