[jeremymims]

Ok, education time.

You may not like ads but they heavily subsidize great content. In fact, the price of a New York Times subscription would be close to $1,500 per year if it weren't for advertisers keeping it closer to $300 (and that's if all their existing subscribers could even afford it).

Alexander Hamilton (newspaper owner, secretary of the treasury, founder of the Bank of New York) said:

"It is the advertiser who provides the paper for the subscriber. It is not to be disputed, that the publisher of a newspaper in this country, without a very exhaustive advertising support, would receive less reward for his labor than the humblest mechanic."

The fact is people dramatically underestimate what it costs to produce high quality content and that as a rule you'd need to spend much more than you'd expect to have access to it.

Advertising has essentially made information free or cheap for the user for a long time. Just because you think ads are ugly and annoying doesn't change this fundamental reality.

[atmosx]

Yes I totally got that when Newsweek published an article called "In defense of Goldman Sachs" came out the day after their 2009 bonuses were made public. Of course there was nothing in the world to defend GS (or Newsweek for the matter who got sold for 1 USD a couple of weeks later IIRC).

I killed my subscription the next day.

I guess if GS wasn't sponsoring, the article would never have appeared or made frontpage, but it did.

The current "advertising model" leaves most newspapers open to foreign interests which go against press freedom almost all the time. That's why WikiLeaks published more interesting content in 5 years and made more scoops than the entire western press in ~ 30 years or so.

In this new Digital Age, the Press needs to find a new model - which mind you, I don't have a clue what exactly should be, since advertisement is what GENERALLY makes the world go round - or face extinction.

[mahranch]

"In this new Digital Age, the Press needs to find a new model"

It did. In this digital age, small time publishers and blogs can now have an audience thanks to advertisers. If they're popular and providing great content they will, at minimum, make enough to cover the cost of hosting. They have a potential viewership of 6 billion people. Without advertisers, this just wouldn't exist. The internet would be different at the fundamental level.

Most people severely underestimate what advertisers bring to the table in terms of enabling content producers.

[atmosx]

That's nothing, that's like microwave heated food.

In Greece you can buy newspapers (paper or digital). You'll see ads from banks, drinks and state-owned organizations (Lottery games, etc.). So basically they are financed from the very same people they should be exposing, that's why in 40 years of bank-state back-channeling and corruption no one has ever been seriously exposed. Not to mention that freedom press in Greece 84th between Togo and Kosovo. Note that USA is 32 and UK is 29, not exactly freedom champions. It's not because they kill journalists, they fire them :-)

You see the problem?

[1] http://en.wikipedia.org/wiki/Press_Freedom_Index

[geminitojanus]

This fact is why newspapers are dead, and online content continues to blossom. In the information age, there's absolutely no excuse for the content they produce to cost $1500/year per subscription.

In fact, that's where we hit the real problem: the kind of content that is covered with advertisements is usually not very good content to begin with.

This is especially true of content aggregators and meta sites such as Reddit and to some extent, this website. The content isn't even theirs: they are simply hosting a discussion forum about the content. A new-agey one instead of the old BB sites, but it's nonetheless exactly the same.

What content providers should be learning is that people are willing to pay for good content. Quality absolutely matters. The 90s and 00s were all about quantity, but now we're up to the rafters with disposable content. Look at the shows with the best ratings today: Game of Thrones, Mad Men, Breaking Bad. Exceptional content quality, heavily pirated because the content creators have failed to adapt to new media distribution. The fact that I can torrent GoT more easily than I can view it from HBO is tragic.

So there's your dose of education for the day.

[jeremymims]

There absolutely is a reason why it's expensive. In fact, I could easily make a case that as a society we'd be better off if more money was invested in creating quality content.

Believe it or not, the subscription costs usually only cover the delivery and printing fees. Historically, subscription revenue has never been a real profit center because it's always been the best interest of a publication to build a larger circulation to increase ad rates.

Now, the internet has brought certain efficiencies to what it costs to distribute content. But it hasn't necessarily impacted what it costs to create quality content. With ad rates being lower online than they are in really any other medium, ad revenue isn't supporting the creation of quality content like it used to.

While Game of Thrones exists on a no commercial network, Mad Men, Breaking Bad, and many more of your favorite cable television shows rely on both ad revenue and subscription revenue to exist. HBO has a cost north of $15 per month depending on your cable network, whereas AMC (which runs commercials) costs about 27 cents in your bundled cable package which is about 2% of the cost of HBO. That's a colossal difference and yes, advertisers, are subsidizing that dramatic cost differential.

[tedsanders]

I'm trying to learn more about this issue. Could you elaborate on the evidence for people willing to pay for good content? I know almost no one who pays for TV a la carte through iTunes or Amazon.

I also don't understand why Game of Thrones supports your argument. Of course the shows that are pirated the most will be the ones that are (1) popular and (2) expensive or hard to access. And of course if those shows were cheaper they'd be pirated less. But I don't see how that relates to the idea that people are willing to pay for good content. My roommates pirate GoT, but I am skeptical they'd pay even if it was available for $4.99 an episode.

[bonchibuji]

I have a Netflix connection and I am in Finland. 98% of the time, when I search for a movie/documentary/series on Netflix, it's unavailable for streaming (mostly because the content for Netflix Finland is far less than that for US). Then, I have to head over to PirateBay to get the stuff. It's the fastest way. I could order a DVD from Amazon UK or Germany, but then it would take at least a week.

As long as content producers and distributors fail to find a faster way to distribute their offerings, I think piracy will continue and grow.

[1stop]

Startup idea: A for pay private tracker with deals with the media industry.

You could track seeds, peers, etc, and pay the media companies a license per peer (whatever). Could probably get a good picture of piracy of each piece of content as well.

[AznHisoka]

Oh man. I'd pay $20 an episode if they had readily available. Even $50 if it had subtitles. I hate waiting, even a hour to download and crossing my fingers the quality is good.

[geminitojanus]

> Could you elaborate on the evidence for people willing to pay for good content? I also don't understand why Game of Thrones supports your argument.

http://bit.ly/1mLgOc3

> I know almost no one who pays for TV a la carte through iTunes or Amazon.

You now know of me. I spend around $50/month downloading content from Amazon, be it music or tv. I would buy Game of Thrones as it came out if I could, but I can't.

Absence of evidence isn't the evidence of absence. Especially if you've done no investigation.

>I am skeptical they'd pay even if it was available for $4.99 an episode.

$5 might be a bit steep for some, $2-3 is just about perfect. But honestly I'd still pay $5 for content created at this level, if not just to encourage the people creating this quality of content to keep doing it.

Your skepticism is powered by your lack of knowledge and research. Do the work, then come back and comment.

[tedsanders]

Actually, this is an issue I'm trying to research and understand better which is why I asked you my questions. Sorry if I offended you.

One thing I did try to find before asking you was data on the size of the a la carte TV/movie market. Anecdotally I know no one who buys TV shows (probably because I'm poor and tech savvy), but I thought I might be able to find comprehensive data to change my beliefs. Unfortunately my Google Fu was not good enough to find anything. I thought you might have a source you could share with me.

(To be honest, I think your response was rude and I feel a little hurt. But it's ok.)

Edit: In hindsight, some of the fault was mine. Of course there are people willing to pay at every price (that is the idea behind a demand curve). I guess what I'm really getting at is what are the best estimates of the shape of the demand curve. Would HBO make more money if they made GoT more accessible/cheaper? Is there evidence that a $2-$3 price point would be better than $5 price point? What are the price elasticities of demand? I guess I kind of wrapped up those more subtle questions into the question of people being willing to pay for content.

[dhoulb]

Good responses, no need for the snark at the end though!

[wes-exp]

Game of Thrones is available on both iTunes and Amazon Instant Video for $2.99 SD / $3.99 HD per episode. I'm not sure if that counts as "failing to adapt to new media distribution".

[emillon]

> the price of a New York Times subscription would be close to $1,500 per year if it weren't for advertisers keeping it closer to $300

The fact that this model works well on dead-tree newspapers, does not mean that it should be copied on the internet. We have tools to customize how sites are displayed, ads shouldn't be a sacred exception.

[tanzam75]

> You may not like ads but they heavily subsidize great content. In fact, the price of a New York Times subscription would be close to $1,500 per year if it weren't for advertisers keeping it closer to $300 (and that's if all their existing subscribers could even afford it).

???

You are off by a factor of 3, given that you're assuming no elasticity of demand.

In the last quarter, the New York Times obtained 46.8% of revenues from circulation, 47.8% from advertising, and 5.4% from other.

Once upon a time, newspapers had more advertising revenue. But today, they're already well on their way to a world of digital nickels, where they have to get their bulk of revenues from subscribers.

[doesnt_know]

I seriously question the figures you've stated, but either way, it's not comparable to this situation.

Reddit doesn't create content. Reddit is a content aggregation service just like HN. You could probably make the argument that some subreddits generate content, which I would not disagree with, but Reddit doesn't pay for that content creation.

Also, plenty of blogs aren't ad supported, or aren't primarily ad supported. I can't remember the last time I visited a "popular" blog and they didn't have an ebook or some other form of merchandise for sale.

It seems to me that those that are most reliant on advertisements are those that house communities or just regurgitate content from other sources. If those sites all died tomorrow, I probably wouldn't care. (That includes HN and Reddit).

[rayiner]

Advertisers don't pay media companies out of the goodness of their hearts.

[Alex3917]

"It is the advertiser who provides the paper for the subscriber. It is not to be disputed, that the publisher of a newspaper in this country, without a very exhaustive advertising support, would receive less reward for his labor than the humblest mechanic."

This doesn't make sense. My understanding is that newspapers weren't primarily ad-supported until the 1920s, when new technologies enabled nationwide economies of scale for both newspapers and ad buyers. Is this not correct?

[jeremymims]

Newspapers were largely ad driven since their "modern day" inception in the early 1700's.

I'm going to need to write a blog post about this since I'm seeing so much confusion about how we got where we are and why we've ended up with ad models we have. It may take me a month or two to get to, but I think this community would benefit greatly from it.

[rimantas]

The thing is there are people who won't click on ads no matter what. So in case it is pay-per-click showing ads will accomplish nothing. In case of pay-per-view it is just a waste of you and advertisers money. Maybe they are ok with that, but I am not obliged to help.