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Unpublished Paper
Platform Siphoning
(2009)
  • Simon P Anderson, University of Virginia
  • Joshua S Gans
Abstract

The business model of commercial-financing relies on advertisers to pay for content. Advertisers will not pay if consumers unbundle the advertisements from the content (advertising bypass). TiVo, remote controls, and pop-up ad blockers are examples of ad-avoidance technologies. Purchasing such devices causes content providers to increase advertising levels (as has happened recently) because the remaining audience is less adverse to ads, and leads to a downward spiral. The bypass option may cause total welfare to fall. Higher avoidance reduces content quality and more mass-market content. We cast doubt on the profitability of using subscriptions to counter the impact of ad-avoidance.

Keywords
  • Two-sided markets,
  • advertising-finance,
  • media economics,
  • siphoning,
  • bypass,
  • death spiral
Disciplines
Publication Date
July 2, 2009
Citation Information
Simon P Anderson and Joshua S Gans. "Platform Siphoning" (2009)
Available at: http://works.bepress.com/joshuagans/26/