That is exactly how I look at it. If they showed no more ads, and got no more searches than the previous quarter, the drop in CPC would be a drop in revenue. But since the increase both ads shown, and buy more traffic, their overall revenue goes up. The question then is when can they not show any more ads (the page is totally ads) and when can they buy no more traffic (everything additional they try to buy is the really crappy robot stuff that comes from some randome armpit of the Interwebs). Then the equation flips, their CPC drops, their searches increase (and costs increase), and they get no more paid clicks than they did the previous quarter. At that point adding money just causes them to reduce profits and they have to start riding the CPC loss down. Given the increase in paid distribution this quarter over last quarter and a loss of 1% in paid clicks, I'm interested to see what next quarter looks like.

If they follow their trends they should pay about 917 to 988M$ for distribution traffic. They will need to get at least a 25% increase in paid clicks over Q2 of last year which would be something like an increase in 5 - 6% in paid clicks over this just finished quarter. If they can't do that then they are going to miss their targets again next quarter. My guess (well what I would do if I were in their shoes) is that they would take it out of the members cut, basically reduce the payout to AdSense for Content and other member sites. Either way, interesting times ahead.