Banner ads: prosperity or extinction?
Ray Ozzie and Bill Gates see bright future for the advertising-supported model:
Online advertising has emerged as a significant new means by which to directly and indirectly fund the creation and delivery of software and services. In some cases, it may be possible for one to obtain more revenue through the advertising model than through a traditional licensing model. Only in its earliest stages, no one yet knows the limits of what categories of hardware, software and services, in what markets, will ultimately be funded through this model.Gordon Parker analyzes the economic effect of the Compensation paradox and views advertising-supported model as an accident:
Web services become free for users because to the extent they are commodities the price converges on marginal cost which is essentially zero. On the other hand fixed costs are nonzero resulting in the effects described by the author. The result has been an explosion of advertising to cover the gap which leaves us in essentially the state of broadcast television twenty-five years ago (less regulation.) The only reason we have such a paradoxical situation (i.e. modern technology and old model) is because of the "compensation paradox."Advertising on the Web ranges from informative to obnoxious. Would Bill Gates pay a flat access fee of $10/month to make all the ads opt-in? More to the point, would you pay a flat fee to make all the ads opt-in?