[chatmasta]

> If these costs are being borne evenly, then it's complete societal waste.

That doesn't make sense.

You are saying because User reads Content, Advertiser pays Content, and User pays Advertiser, that the middle step of Advertiser paying Content is unnecessary, because User could pay Content.

Simple counterexample: I like reading techcrunch, but would never pay for it. But I might see an ad for a new device that I like and would pay for, on techcrunch. If I click through the ad and buy it, then everyone wins. Techcrunch makes money from me, who would never pay them directly, because the advertiser pays them, and the advertiser makes money, because I buy their product.

[RodericDay]

See, I really like markets, and I have a problem with phrases like:

> I like reading techcrunch, but would never pay for it.

Sounds to me a lot like Mitt Romney talking about how his wife has the most important job in the world, but she's essentially his unpaid housewife. Sounds hollow.

You are paying for techcrunch, by buying products advertised on it. It would be good for the finances of everyone in society to know exactly how much. If the product company could slice prices in half because their arms-race marketing budget is soaring, maybe you'd change your mind and pay techcrunch directly, so that you, techcrunch, and the R&D department of the product benefit, while marketing stops soaking up a large chunk of the money exchanged.

[Avshalom]

>See, I really like markets, and I have a problem with phrases like:

>> I like reading techcrunch, but would never pay for it.

Like most people in the world I can't trade time for money beyond a certain threshold AND I can't usually use that money and earn it simultaneously. While my attention is also limited it's something I can split so many people can pay for a small portion of my attention while I am simultaneously using whatever those fractions of attention are paying for.

Thats why "What I'll Spend Money On" is not the same as "What I Like" (in this case, there are of course various other situations in which they are different for other reasons)

[paulmd]

Costs don't drive prices though. Products are priced at whatever the consumer will pay, and if they won't pay enough then the product doesn't get made.

Price competition is an idea that exists but it's plan Z for any business. It's the last resort when you can't produce a superior product or find another niche that justifies higher margins. Think AMD vs Intel here.

No sane businessman has ever woken up and decided to slash his profit margin just for the hell of it. You can tell by the fact that businesses make profits - that wouldn't happen with perfect competition.

Nobody wants to be the low-margin high-volume product, because you're only a bad quarter away from low-margin low-volume. And once you're in it, it's a really hard pit to climb out of.

[ryandvm]

The problem is that nobody is asking the actual market value of their product. TechCrunch would probably want subscribers to pay north of $5/month. But the actual marketing value (in ad revenue) that they are currently able to extract from a single reader is probably closer to $0.50/year - if that.

You solve the micropayment problem and then we can talk about what I'm willing to pay for content.

[eevilspock]

Mozilla Research put the entire web's advertising revenue at $12.70/month per user[1]. In other words, if they are right we are living with the consequences of advertising for a mere $13/month, $13 dollar they still get from us anyway because it's baked into the prices of the advertised products.

> You solve the micropayment problem

We hackers and technologists here at HN are the "You".

"The best minds of my generation are thinking about how to make people click ads. That sucks." – Jeff Hammerbacher, fmr. Manager of Facebook Data Team, founder of Cloudera

As I put it here a couple of weeks ago[2]:

You're putting all the responsibility on the consumer, and none on us, the technologists, the so-called innovators. Where are our innovative powers to come up with alternate busniness models? Where are our backbones to stand up against selling out the internet so that we can get rich quick?

Because that is what the advertising business model is: a get rich quick scheme. Undercut the straight up competitors that charge for their product by fooling consumers into thinking you're offering what the other guy is offering, but for free. Come on, who could turn down that?

The saddest thing about Hacker News is that we all get behind radical things like FOSS (Bill Gates called it un-American) and Snowden, and fight SOPA and NSA violations of privacy, but because too many of our salaries depend on advertising revenue, our cognitive dissonance blinders go up lightning fast.

-

[1] https://news.ycombinator.com/item?id=8586294

[2] https://news.ycombinator.com/item?id=9961761

[Merovius]

> In other words, if they are right we are living with the consequences of advertising for a mere $13/month, $13 dollar they still get from us anyway because it's baked into the prices of the advertised products.

I am sorry, but I can not understand what's the problem with that. I can put out my content for free, everyone, regardles of economic situation can consume it. Prices will increase accordingly, but it won't affect everyone equally. The food you need to put on your table to survive, your electricity and your water doesn't have as large a chunk in the advertising budget as the latest iPhone, Macbook or random technology product. So at the absolute worst, the people buying luxury products subsidize people who wouldn't be able to afford my content otherwise. What's so bad about that?

Another implicit assumption that is very questionable for me as a non-economist is: The overhead the advertising company gets doesn't disappear. In general money doesn't disappear. It gets spent on the employees of the ad-company, which increases spending power and is good for the economy (?). It's a bit like energy. The amount is mostly constant, it's the fact that we move it around that creates value. The absolut worst you can do with your money, is not spending it. Because it can't create value like that.

[maxerickson]

Why assume there would be less overhead without the ads?

With ads, there is also probably less friction visiting unknown sites; clicking to a site with too many ads and then just closing it is probably a better experience than knowing you blew $0.05 on crap content (I'm not saying getting frustrated about $0.05 makes sense, I'm saying it will probably happen).

[eevilspock]

You and dragonwriter are missing my point about innovation, and also greatly underestimate the overhead cost of the advertising-publisher industrial complex.

[maxerickson]

I didn't make an estimate, I asked you to justify your assertion.

[dragonwriter]

> Mozilla Research puts the entire web's advertising revenue at $12.70/month per users[1]. This means that is the most we'd have to pay on average if could just pay directly (and in fact less if because all the overhead and externalities go away).

Direct payments have overhead and externalities (aide from simply payment processing overhad, consider that instead of providing content to all comers with accompanying ads, content providers have to have paywalls -- to stop the content from getting taken for free -- and find some way of promoting content to those who haven't yet paid to convince them to pay for it.) Neither the paywalls nor the promotional efforts are free of cost.

[loco5niner]

> Sounds to me a lot like Mitt Romney talking about how his wife has the most important job in the world, but she's essentially his unpaid housewife. Sounds hollow.

No, he's actually saying that raising the next generation is the most important job in the world. aka, Mom. And I think he's right.

[acdha]

Most of us live in market economies. Jobs which are truly considered to be important have respect and pay well. In contrast, in the U.S. we don't even respect mothers enough to e.g. give them enough time to fully recover from giving birth before going back to work or ensure that nobody has to worry about losing their job or income if they take a sick kid to the doctor.

[mercer]

Man, I don't want to derail this conversation, but I have so many feelings about this issue. And they often conflict.

As someone raised in a very traditional religious environment, I am not a big fan of the market economy approach of quantifying and anonymizing roles (including that of my local grocer or 'fishmonger', to name an example).

But on the other hand, we live where we live, and in this world I figure if we don't respect mothers because their role is difficult to express in money, we should at the very least fix that and give them all the support they need, monetary, paid leave, or otherwise.

[loco5niner]

> Jobs which are truly considered to be important have respect and pay well

Correction: Jobs that return a very positive cash flow (for someone) pay well. (Teachers, Cops, Firefighters vs Brokers, Singers, Pro Athletes)

[acdha]

I'm not sure those examples mean what you say – e.g. teachers are allegedly important but get paid far less than your other two examples, have increasingly regimented working conditions and are popularly blamed for circumstances outside of their control. In contrast, it's far less common for anyone to e.g. go after first responders’ pay or benefits or talk about how public safety depends on breaking their union.

Unsurprisingly, that respect gradient also tracks closely which jobs are stereotypically female-dominated. Even staying in education, school administrators - historically male – get more respect for comparable levels of education and are paid more for doing less work.

Again, the point is simply that our talk isn't backed up by our actions.

[RodericDay]

He's paying lip service to that idea. As acdha points out, he's not "putting his money where his mouth is".

[loco5niner]

Sure he his. She's a stay-at-home mom. Whose paycheck bought the house, etc? His.

[Merovius]

I think what they meant was "This job is important. So we should pay it accordingly. It is kind of hollow claiming that a job is important, but at the same time not paying it".

[loco5niner]

Yep, I get that's what was meant. It's just not logically sound.

[fwn]

No, paying for a website and being the reason some website is enabled to make money aren't the same things.

This is because the most important part in the whole process of wealth creation is it's incentive structure. Reducing it to the end state money distribution is like ripping a dimension off the market.

[chrismcb]

Product companies NEED advertising. Sure they could slice their prices (not in half) and not advertise. But then they would only grow by word of mouth. For some that is enough, but for most companies, it isn't enough.

[aylons]

In your example, there are two possibilities: either you did want and need to buy the product before the advertisement or you didn't.

In the first case, the advertisement was wasteful: the company that sold you the product has unnecessarily spent money, which goes to the product price. And this is not a small amount: big consumer companies spend billions on advertisement space/time alone, an amount comparable to their R&D expenses. I'm talking about ads alone, not other marketing expenses, many of which are related to advertisement. In most companies, marketing budget dwarves R&D, by the way, and in some markets, this costs could very well be the biggest chunk of the price in a product.

In the second case, you would not buy the product without the ad. That may mean that you simply didn't know the product before and finding it was good for you, but most probably you didn't need it or would not want it if not because of the ad.

In this common case, you didn't win: you just spent money because of a need/want that you didn't have before seeing the ad. You were hacked and exploited for both the publisher and advertiser benefit.

[andygates]

There's an amusing and relatively new third case where you already have bought the product, but ad servers are dumb and will spam you with ads for that product for months, because your trackers said you searched for that product once.

It's wasteful, but in an almost ironic novel way.

[harryc2011]

I wanted to mention this exact thing on one of the threads earlier today but couldn't articulate it properly.

In the UK the department stores John Lewis and House of Fraser are both guilty of this - if I browse something on either of their sites an ad for it follows me around the web for ~4 months.

E.g. I was buying Birthday gifts for my girlfriend at the beginning of July and looked on both of these sites and they are both displaying the same ads to me (i.e. at this point both are spending their advertising budget to annoy me)

What I want is this - a space where I can say "I'm looking for a picnic hamper for a gift & I want to spend between £25 & £50. I need it by date X" This can then be given to the advertisers (auctioned?) and they can display some ads to me which are relevant. When date X is reached (or I indicate that I've bought said item and am therefore out of the market) these ads stop. For added info I can even say what I bought and why - e.g. "I bought X in your store as a picnic hamper won't fit through my mailbox"

Surely this is more useful for everyone involved? I get ads which are actually being targeted based on something I control (vs. being inferred via which sites I happen to click on or what cookies are set) and the advertisers get more detailed info as well.

[corford]

I believe such a thing already exists :) http://imgur.com/p6GD6kD (plus no need for a "need it by date X" feature as these ads don't follow you around everywhere!)

[drivers99]

Actually some advertising is intended to reach people who already bought the product, to reassure them they made the right decision, and to keep buying their brand in the future (brand loyalty).

[s_kilk]

For me it was when I started playing Ever Online, for months after I would see endless banner ads for the game screaming "JOIN NOW!".

But I already had joined, and even if I wanted a second account I already know where to go to get it. Ad tech is dumb, real dumb.

[pc86]

For crying out loud. There's also a third option: you're researching similar products because of an existing need, and you haven't heard of $ADVERTISING_COMPANY before you saw the ad, and they turn out to have a better product than competitors.

> You were hacked and exploited

Yeah, that's not what either of those words mean.

[aylons]

> For crying out loud. There's also a third option: you're researching similar products because of an existing need, and you haven't heard of $ADVERTISING_COMPANY before you saw the ad, and they turn out to have a better product than competitors.

Actually, I did address that, as part of the second case:

"That may mean that you simply didn't know the product before and finding it was good for you"

>> You were hacked and exploited

>Yeah, that's not what either of those words mean.

Late response for the record: you think you're in control of your mind and how it works. But advertisers are very ingenious in developing ways to make your mind behave in a manner you (the admin) does not want it to, in a sneaky way. A very good metaphor for it is hacking.

Unfortunately, this is neither DefCon or a James Randi show, so they do not do it for fun. They explore this hack to take advantage from you (your system, if you will) for their profit and your damage. An exploit.

I did not use "literally", but I refrained from using a more strong indicator of a figure of speech (eg, using "virtually") because I though I could engage in a better debate here then this. I still think I was right, but there are always exceptions.

[aembleton]

He might have had the need before seeing the ad but hadn't seen a solution.

Adverts are at their basic level a way of informing end users about what they can purchase. They are also there to try and raise brand awareness. People are more likely to trust a brand that they have heard of rather than some unknown.

[RodericDay]

> People are more likely to trust a brand that they have heard of rather than some unknown.

Is this a good thing?

[fwn]

Brand awareness is one reputation mechanism. For better or worse. ... and reputation itself is a good thing.

[andrepd]

Not at all. Makes brands with colossal marketing budgets sell more despite there being better alternatives from small companies. But that's how human consumption works, and it's virtually impossible to change that.

[imgabe]

In the first case, you know you need some product, but not necessarily which one. You need a pair of shoes, but are you going to get Reeboks, Nike, Asics, or what? They all serve the need you originally had, advertising is just directing you towards one or the other.

[commentzorro]

I hate it when style items like shoes are used as an example. Once you're out of your teens shopping for shoes just isn't much of an issue in real life. Real life is more like, "I need a vacuum. It needs these properties: canister, quiet, light, and a beater brush." No ad is really going to give you this information. Any ad showing a vacuum is just wasting your time. You're going to go to an objective site to compare products, not click through to some random site and purchase.

And advertisers know this so we get a host a stupid ads trying to convince you that one flavor of sugar water is better than another. Or that this poop inducing yogurt is better than that. In other words, effective ads rely on trickery to get you to think style is more important than substance.

[chrismcb]

I need a vacuum cleaner. I know a couple of companies, I research their vacuums. Still not sure what I want, then I see an add for foobar vacuums... Never heard of them, let me go research them too. By the way, for YOU, shopping for shoes isn't much of an issue, but that isn't true for a lot of other people. The other thing is a lot of people don't spend their time "going to an objective site"