The thing is they get paid better than that by the advertisers for your attention. Their ARPU is estimated[1] to be $53 for 2016 and that is across all the users, not only people who are ready to spend money on online services. And as a free service, I bet they are quite a bit more resilient to churn than a similar paid offering would be.

1: https://www.forbes.com/sites/greatspeculations/2017/05/24/wh...

What am I missing? That is less than $5 per month and I'd even pay 10-15+. They could make it optional.

My guess is, if the users could pay to opt out, the value of the customers that couldn't would drop dramatically, and you'd end up paying substantially more

You would, 99% of facebook would not. You would have to pay 1000 dollars/month together with the rest of the 1% for it to be viable, but with only 1% of Facebook, another free one would appear.

That's the average. Anyone reading hn is probably worth rather more.

But how do you explain that $4.65 per quarter does not match $53 per year?

The $4.65 per quarter is the revenue per user(globally). The $53 per user is a figure for North America only.

Google is trying that again with news websites: https://contributor.google.com/v/beta

Most consumers really don't like paying for things and don't really mind unobtrusive ads, so seems unlikely the economics would work out for google search or facebook.

Presumably a major barrier to offering this is that it threatens to break up network effects and selectively remove the highest-value consumers from the advertising pool.

It's not just about losing 'reach', if only a few percent of people bought the opt-out that would probably be a minimal issue. It's also about who buys the opt-out; the people who can (and would) afford to do so are presumably wealthier than average and help justify ad sales more generally. I don't know the exact breakdown, but presumably it's a power-law situation. If you're the kind of consumer who could conceivably buy a truck through a Ford ad, how much more are you worth than everyone else? 2x? 10x? 20x?

(Of course, the kind of consumer who deeply dislikes ads is probably less likely to click them regardless of wealth. So maybe charging the ad-block contingent a flat rate would actually work out?)

I feel like this is the main reason more apps don't offer an ad-opt-out as an IAP or buying a license or whatever the format might be.

The users most likely to go for it are the ones with the highest disposable income, i.e. the people most valuable to Advertisers.

Users with high DI * fee for removing ads < value of users to advertisers lost * users with high DI

Basically meaning that the revenue gained from allowing removal of ads would devalue their user pool in terms of advertising revenue so much that it's a net loss, even if they gain reputation with the users and possibly attract new ones.

This is just my theory though.

You might, I might, but how many others will? A vast number of users can't. Just as many simply won't, for any amount greater than zero (a point briefly alluded to in the article). At some point, the "network effect" breaks down, diminishing value even for the users who remain. Good, you say, so Facebook and Google collapse into the same ruin as AOL and Geocities and all the rest? Perhaps, but the billions of users and advertisers and employees/suppliers who currently get some sort of value from the system might not agree.

Also, the advertisers will still be advertising at you, BTW. They'll just be doing it with even less information about what ads might actually interest you. They'll be finding other ways to make sure their ads stay in front of your oh-so-valuable eyeballs. There'd be a lot more "sit through this damn video before we deliver content" all across the web. I for one would not be grateful for that.

> BTW. They'll just be doing it with even less information about what ads might actually interest you.

Good, Ads should be Contextual to the context of the site/subject being viewed NOT contextual to me.

i.e if I am on a site reading about the latest hard drive to come out, Show me ads for a NAS or a Computer, etc. Do not reach into a collection of data about me and show me diaper ads because you think I just had a new child

That's fine when you're on a niche site, but most people don't spend most of their time on those. What about a site - like Facebook, like Google, and so on - that covers every topic under the sun? If they limit themselves to ads that even the most hardened skeptic would agree are relevant to the content currently being viewed, they will be showing far fewer ads. That's what leads to their being more intrusive. Would you still be as happy about only seeing ads for a new NAS box if every such ad forced you to wait for 30 seconds before the content you came for was actually delivered?

Companies have been selling general ads for decades. Billion dollar industries have been created on selling General Viewer Ads.

I always found it fascinating that a TV Channel can sell Ads with out any real tracking any real data on the individuals users watching the ad, and they can sell these ads for $$$$$$$

Yet you tube which has much higher viewer numbers than any TV Channel can not seem to sell ads at all, the ads are of low quality, and they need to be ultra targeted.

At the end of the day though, if they can not find away to market their ad space with out tracking me and knowing every detail of my life well then they need to simply exit the market.

There is zero justification for building these types of databases, they should be resisted as strongly as possible, and we need to institute much strong data security and privacy regulations on how the data is collected, stored and used. Including the ability to require all services to allow individuals to audit the information they are collecting about them and to force a company to delete all information about them if the user wishes to stop using the services.

That's a misleading comparison. So companies will pay millions more for TV ads even though online ads might reach more eyeballs? Yeah, that's weird, it would be great to understand why they're such idiots, but the reasons don't affect the reality. The reality is that they won't pay more for the online ads. What they do pay, they pay on the basis of targeting which directly correlates to conversion rates etc. Do you think internet companies wouldn't jump at the chance to spend less on all those analytics systems, reduce privacy complaints, and still get more ad revenue? They have those systems and the people who run them because they have positive ROI. They're simply not going to do something that makes their whole growth/revenue model collapse. They might look with envy at what TV networks get away with, but only in the same way that you and I might look with envy at what singers and sports stars get away with. It's basically irrelevant.

A common refrain heard in the industry:

Half of all advertising is useless. The problem is no one knows which half.

> i.e if I am on a site reading about the latest hard drive to come out, Show me ads for a NAS or a Computer, etc.

So, it turns out that you completely ignore those adverts because you have banner blindness and you're on the site to read about the latest hard drive, not the one someone is paying to reach you with. If those ads worked, the CPM would be higher and advertisers would invest in those instead. But they don't, so contextual it is.

I dont ever see the ads because I have multiple layers of ad blocking at the network, PC and Browser Level...

if a Ad gets through I spend some time figuring out why then ensuring it is blocked going forward

For what its worth, you can still call AOL on the phone if you get locked out of your account, and they still have millions of users. As someone who's helped people with their locked out AOL mail accounts before in the last five years, I can easily state that AOL is a superior customer service experience over Google.

(Mind you, case can be made that Google's lack of the same makes the account more secure.)

The trouble is that only the most engaged minority of users would be willing to pay for the service directly. What I'm interested to see is whether we can build services where the people who care most end up covering the costs for the rest of the users. So you pay $5 for a facebook-like service that then provides free services to everyone who knows you. You would have all the same funding problems as other public goods but there are plenty of them that make it work. Of course, even if something like a public radio or other public support model would fund a social network sustainably, you would still have the network effect problem in terms of getting people actually switched over.

The problem is that paying doesn't guarantee you won't be treated as product as well. Companies try to maximize their revenue, and if they can get away with charging you while continuing to show you ads and sell your data, they will.

> I'd gladly pay $5 even per month for Facebook or Google if only they treated me as a customer instead of the product.

If you paid them you'd just be the customer AND the product. There's no way they will not exploit your data.

> I'd gladly pay $5 even per month for Facebook or Google if only they treated me as a customer instead of the product.

Such as providing support and a contract instead of ToS.

Your $5 a month won't far for that