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How The Internet Killed Profit

Stashed in: Monetization, economics, You are the product., Economics, Monetization

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He talks like this could have been avoided.

In a world where we don’t pay with our money, it’s assumed we can pay with our attention, and thus 80 percent of apps and most of the news and music industry is now focused on advertising as their primary funding principle. But the unspoken killer problems of ad funding are that digital ads don’t seem to work — their performance is declining, and the value of each ad is getting lower. While Facebook, the poster child of success, is worth over $190 billion, its revenue would place it well out of the top 1,000 companies. In a year, for all the value it provides, it extracts less than $10 per user per year. By contrast, the much-maligned AOL manages to make double this amount per month from their remaining dial-up subscribers.

The simple fact remains that few companies — in fact just one company ever, Google — has made an amount of money remotely exciting to those with a grasp of real-world economics. Newspapers may be creating more content for more people than ever, but the loss of advertising and subscription revenue is three times greater than what they make online as a replacement. As contrary as it seems given the optimism, the advertiser-funded Internet isn’t working and that won’t change soon.

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