The 'ad' advantage

So the online models of business are changing.

The New York Times has shut down its member-based, pay-only sections, looking to ad revenue to generate that income instead of online readers. Meanwhile, Spiral Frog is giving away music if you'll watch a 60-second advertisement.

What does this mean for online media? My money is on this being a trend. Advertising already underwrites television content and many publications. I've always been told, in fact, that newspapers and magazines make all of their money on advertising; that subscriptions merely pay for the paper they're printed on.

However, there is a new, competing trend in TV: premium content, ad-free, for an upcharge. And looking at the success of things like TiVo, HBO, and TV shows on DVD, I'd say (anecdotally, at least) that people are willing to pay for the convenience of being ad-free. So why this discrepancy, i.e., TV moving away from the ad-based model and online media moving toward it?

One thing, I imagine, is the current perception that online information should be free. It's not seen as entertainment; it's seen as a resource. While people go online to entertain themselves, they regard it as something different than watching a movie or sitcom for relaxation. However, if advertisers get smart -- and start targeting the ads properly -- the line between advertising and entertainment will continue to blur. A quick search on YouTube showed hundreds of advertisments that people actively search for -- and watch. Why do people watch the SuperBowl just for the ads? Because they're enjoyable ads. If Spiral Frog or the NYT can sell and carry ads (video or static) for online media, consumers, media companies, and businesses will have a winning model.