Advertising takes away the trade-offs: more customers mean more money, both in terms of increased inventory and also increased leverage on your advertising infrastructure; meanwhile, the lower prices made possible by ads lead to decreased churn. At the same time, the upside for advertising revenue is effectively infinite, given that increased prices-per-ad aren’t felt by consumers; if anything, it means they are getting better targeted and thus more valuable ads.
Two things about this are frustrating, though:
- The ad tier for these services is more expensive than the ad-free tiers used to be. We’re paying more and getting ads now, so it’s not like consumers are actually saving money here.
- It depresses the hell out of me that advertising tiers are more profitable for these companies, so it’s actually in their interest to get me to subscribe to the ad-supported tier.