The problem is that once you segment your customers into paying and non paying. The non paying customers become much less valuable to advertisers and the paying customers become much more valuable.

So the service needs to charge even more, which makes paying customers even more valuable in a feedback loop. The usual result is that eventually the service can’t help themselves and starts showing paying customers “a few” ads. Then the definition of a few gets larger and larger.

> The non paying customers become much less valuable to advertisers

I can see this being true, but I'm curious why. Is this because the advertisers know the paying customers have the cash to pay for the service?

Outside of a very few markets that prey on desperate people's last dollars (payday loans, etc), most advertising's objective is to get people to buy something - advertising to those who can't afford it is useless.

Advertisers want the attention of people with disposable income. If someone's paying for something as superfluous as a streaming service, then they must have more than enough money to spend on whatever they want to sell.

The more you pay in general, the more they want you to pay them specifically.

It doesn't work. Paying to avoid ads makes you more valuable to advertisers. They will offer more money for your attention and some executives will eventually think they're leaving money on the table by not doing it.

The problem with advertising is that the price of an ad view directly correlates with how wealthy the viewer is. Being able to opt-out would essentially make the advertising platform worthless as the only audience would be broke people who can't afford to pay to opt-out and are thus very unlikely to be able to afford your product.

The only way would be if regulation either mandates a reasonably-priced ad-free tier (priced at the average revenue from an ad-viewing user) or other restrictions (GDPR but actually enforced, the website being liable for the ads it shows, etc) that would make advertising completely unprofitable.

> The apps described in the article are effectively recognizing this consumer surplus/need and acting on it.

Presumably, AA is pissed off because the people that value their time enough and have the skills to set up and use an alternative are people they'd very much want looking at their ads, much more so than the plebs who already use the website and see the ads.