Whenever given an opening, I tend to launch into a speech about how I think online publishers need to start using a hybrid subscription revenue model with a tiered advertising model. In other words, a visitor to a website who chooses to remain anonymous gets lots and lots of ads, a visitor who offers enough information to allow for accurate targeting and is willing to interact with marketer content gets just a few carefully selected ads, and anyone who wants to opt out can simply pay a fee–maybe a day pass for 24-hour access or a slightly larger amount for a year of ad-free content. A lot of websites are already doing this (Pandora does a great job), but it’s hard for them to do it well because each site has to do it themselves without a lot of outside help. You have to get the credit card out every time you go to a new site and spend five minutes on each form. The other problem for the publisher is what to do with all that empty ad space in their static page templates–the technical challenge is programming in a way that presents content equally attractively with or without the ads.
I happen to be in the middle of re-reading an old favorite of mine for a book club, Robert Reich’s Supercapitalism and it helped spark the idea that led to this post. If you haven’t read it, you should, and just for context, I’ll quote a bit of a blurb from the back: “Supercapitalism highlights a new kind of social conflict–between ourselves as consumers and investors and ourselves as democratic citizens.” Reich reminds me that the best systems internalize countervailing power. Call it a corporate ecosystem or whatever you want, the important takeaway is that any time you have a system where the regulated become the regulators, the whole system gets out out of whack. The Yin swallows up the Yang. The way around this is to incentivize balance over competition for control.
Right now, there seems to be a battle between the proponents of the subscription model and proponents of the advertising model, and when I step back to think about this on the level of the system, it dawned on me that ad servers have no incentive to serve less advertising. They are fundamentally locked into an arms race of exposures because that’s how they make their money. So, wouldn’t it make sense for ad servers to also start managing subscription revenue? In theory, you could even bundle an ad-avoidance subscription across competing sites as long as the ad server is employed by both rival sites and is managing the revenue stream.
This would create a healthier system I think. It would maximize the amount of revenue by improving the user experience. By standardizing the subscription process, it would probably also increase subscription rates, since customers would learn the behavior. When I say learned behavior, I think about how buying your first album on iTunes is a huge pain, but once you have your account set up and your ipod running, purchase is pretty painless. On a similar train of thought, part of my problem with the iPad is that there isn’t much of a tiered pricing structure when buying content. I can get a subscription to Wired Magazine on the iPad for 99 cents/month, but I can’t get a free version with ads in it. Wouldn’t it make a ton of sense to have video and interactive iPad ads that are targeted precisely to me based on all the info Apple has on me? The music I buy and the podcasts I listen to ought to be plenty to inform some algorithm in an ad server what ads I’ll respond to.
Anyway, go read Supercapitalism and shoot me an email if you happen to come across an enterprise-level ad server that also acts as a plug-n-play subscription manager.