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.
- Two-sided markets,
- media economics,
- death spiral
Available at: http://works.bepress.com/joshuagans/26/