 By Silicon
el 13-May-2008 |
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 I have noticed a meme in the constant conversation about revenue models for web services recently. People are proposing a version of the 'freemium' business model with the following twist: a product has slightly intrusive (but contextually relevant) ads baked in that users can remove by paying a small monthly fee.
I understand the intuition of the people proposing this revenue model. They know that consumers dislike ads. But they also know that ads are a 'necessary evil' in order to make free web services sustainable, or even profitable. So, they're trying to strike a compromise with consumers that appeases both free-zealots and anti-advertising-zealots.
But, this revenue model seems silly to me. Advertisers pay a premium in order to reach people in their specific demographic with disposable income. This idea of people paying to remove ads ensures that the audience for your ads are actually CHEAPER than the average internet audience.
Why? Because the people in your audience with disposable income who are willing to pay for web services are the same ones that will self-select out of your audience for your ads. So, all that remains in your audience are people that are too cheap to opt out. That doesn't sound like the audience that Disney (DIS), Coca Cola (CKE), or even your average direct response advertiser wants to reach.
Paying to remove advertising is an interesting thought, but it's not fully baked at this point. The real sustainable solution is to create 'paid content' that your audience doesn't actually view as 'ads.' For example, the last time I tried Adblock Pro, I noticed that it didn't remove AdWords (GOOG) in other words, the creator of the ad blacklist I used saw AdWords more as content than as advertising. That's the real home run.
Andrew Parker is an associate at Union Square Ventures and blogs at The Gong Show, where the original version of this post ran.
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